Valic’s financial advisors, who provide retirement options to employees of the Monroe County school system, suggested the school board design the program as an opt-out instead of an opt-in. In other words, employees will be automatically logged into the program and can request to be removed from it rather than the other way around as is currently the case. The board also discussed the corresponding employee pension contributions. He voted to approve deactivating the program, but requested additional information about school system spending before deciding whether to match contributions.
Superintendent Dr. Mike Hickman said about 375 employees in the Monroe County school system are included in the teachers’ retirement system (TRS), which is not optional for them. Teachers are required to put 6% of their salary into the TRS and what they can expect to retire is well defined.
About 300 Monroe County school employees are not included in the state’s TRS plan. The Valic pension plan is available to all employees, including those also covered by TRS, but is likely more valuable for those not covered by another pension plan.
With Valic, the base deduction is 3% of salary, and the board is considering matching that 3%. Jamie Story, a representative for Valic, said it’s often difficult for employees to think about 20+ years before retirement. He said other school systems, such as Peach County and Houston County, that have opted out plans have seen large increases in attendance. Matching incentives also increased participation. Employees always have the option of leaving the plan at any time.
Story said the average retirement age is 57 to 58; the average life expectancy is around 85 years. Participation in the Monroe County Schools Retirement Plan is 25% and the average account balance is $36,011. He said what happens to employees who don’t save enough in a retirement plan is that they have to continue working even after they qualify for retirement.
Hickman said encouraging retirement plan enrollment and offering a match can help retain employees. The match can be any percentage and may limit the amount of employee contributions it will match. Employees have the option of contributing more than 3% of their salary to a Valic pension plan.
Deputy Superintendent Jackson Daniel said if the board votes to match employee contributions to Valic’s pension plans, the estimated cost will be included in the school system’s budget for the 2022-23 fiscal year, which begins July 1.
Board member Greg Head asked Daniel to run some numbers for the 3-6% matching contributions for employees expected to enroll in the program and brief the board on the expected cost of the contributions counterpart. Head also suggested a survey of employees to make sure they understand the changes.
Hickman said the biggest benefit of the school system is that employees are happier when they have options.
“We’re just trying to improve our employee relations,” Hickman said.