Retirement (Plan) Excitement!
March 25, 2007
A couple years ago, the university I work for conducted a survey of the staff about their satisfaction with the existing retirement plans and what they wanted to see change. The current plans are split between the exempt and non-exempt staff.
Currently, exempt staff are required to contribute 5% pretax monthly earnings, and the university contributes an additional 10%. Employees are vested immediately.
Non-exempt staff, however, have the university contribute 2.2% of their salary to a plan they are not vested in until they’ve been with the university for 5 years. The types of compensation used to calculate the 2.2% amount was limited, and there was a preset pension plan. Their lame excuse was that, in previous years, the exempt plan was available to all staff but since the non-exempt employees didn’t bother to participate, they were given the stepchild’s version of a retirement plan. No choices, no control, and no matching. Boy, they really taught us a lesson! No wonder the non-exempt employees “believed that the features of the Faculty and Exempt Staff Retirement Plan were more advantageous” and “have asked to be included in the defined contribution plan and have sometimes gone to extraordinary lengths to try to qualify.”
The only way to actively contribute to a retirement plan through work, and reduce taxable income, was to use the Supplemental Retirement Plan, which I did, to contribute to a 403(b) without the benefit of matching.
They’ve finally decided to make some changes, and starting in July of this year, all staff will be automatically enrolled in a new program at the highest contribution level of 5%. The employees will be able to reduce their contribution rates if they wish, and the university will reduce their match correspondingly: Employee 4%, University 9%; Employee 3%, University 8%, and so on. But, if the employees choose not to participate at all, the university will still contribute 5%. AND your contributions will vest immediately. You literally cannot lose with this plan. (I think.)
The previous contributions made on our behalf will be frozen, but we’ll still retain access to those benefits if we stay at the university for 5 years. And, we can continue to contribute to our existing Supplemental Plans, so long as we adjust the amounts to make sure that we don’t exceed the IRS limits of contribution.
Now, that is awesome!!
That sounds like very good changes for you. Make good use of them. š
I wish universities would extend something similar for their student employees. We are treated like step-step children…no retirement plans, no vacation days, no nothing.
Non-profits usually have great packages for staff memebers. I remeber talking to this person at a conference, he got 14% salary match for his 403. AND he got into some pension plan, think he was in his early 30’s. He worked in education.
That’s awesome you are getting a boost in your retire plan.
Golbguru:
I don’t know about other schools, but the school I went to seem to only care about new stadiums and new flashy buildings. They treat the students like McDonald line customers, and use our money to fund excessive construction projects. I can only imagine how they treated the TA and GA’s. Yea, I won’t be at the Alumni events š
~Golbguru~ I’m extremely excited about this, I think I’ve told about ten random people with whom I don’t usually talk finances. It’s so weird, one coworker is totally apathetic about it but she loves her FSA. The other is excited like I am, but can’t be bothered to contribute to an FSA. I guess I’m the perfect combination of the two of them š
I know we don’t offer benefits to our student employees but we’re talking about offering them part-time status instead of internships so that they can accrue some sick days or something.
~Cash~ I think it’s just the salaried employees who get the good stuff. But a 14% match? That’s CRAZY.