Update on Retirement Forums
During a three-day period in mid-January, we hosted seven open forums to discuss recommendations from the Retirement Plan Redesign Task force. More than 150 attended and engaged in healthy dialog with varied opinions on the proposed changes.
Since August, this cross-functional task force has worked with the higher education consultants from Aon Hewitt to study retirement preparedness, trends in higher education plans and how the Augustana community compares. As many heard, there are some interesting differences between Augustana's current plan and what is occurring among our peer institutions.
- Of the higher education institutions that offer a retirement benefit (26% offer nothing at all), 79% have some form of a matching plan. Only 21% are structured as Augustana is currently, with a non-matching contribution.
- Currently only 31% of Augie employees participate in our voluntary plan, compared with a 65% average participation within higher education plans.
- For those who do participate in our voluntary plan, the average savings of 6.4% of salary is higher than the higher education average of 5.9%.
- For most everyone, the current 10% non-matching contribution will not provide adequate retirement savings.
The task force's proposal suggests a move from a 10% college contribution with 0% matched savings, to a 7% college contribution with a 50% match on the first 7% of employee earnings. In addition, the task force proposed a minimum match level to provide an increased level of benefit for those at the lower end of the earnings scale. The feedback gathered was robust and varied, ranging from positive support to strong opposition. To summarize some of the most frequent comments:
- Can we create a transition plan, so this is implemented in a manner that doesn't require such a major change from those currently not saving within the Augustana plan?
- Some believe the college will save money as a result of these changes. Some attendees raised the issue of transparency, recommending that the college track the actual versus expected cost. If cost is indeed less than expected, then attendees expect that the savings should somehow be reflected in future retirement plan design changes or other benefits.
- Do we really need to implement a match-can't we just do more education or a voluntary plan?
- The issue of Roth savings came up in several of the sessions. "If you want me to save in this new plan, then I might want to use a Roth basis, as I am now with my Roth IRA."
- "Can we provide a few simple examples of the impact of pre-tax 403(b) savings on a person's take home pay?"
- Some expressed concern that these changes imply that the college's retirement investment alternatives are better than other investments people may be using currently.
This level of feedback was helpful as the task force works to finalize a recommendation. A change of this magnitude will go through many phases as we work through concerns and logistics before implementation. We anticipate the earliest a plan change might occur would be in the first quarter of 2014. The next step will be a final recommendation from the task force based on the feedback, and sharing the information with all on campus.
Thanks again to all of you who attended these sessions. For those who were unable to attend, you may view the slideshow presented at the forums for more information. All task force members are happy to discuss this issue with you.
Task force members include: Sheri Curran, David English, Bill Estes, Laura Ford, Darlene Link, Mindy Mull, April Peterson, Tammy Showers, David Snowball and Matt Walsh.