Title
AUTO-ENROLLMENT OF NEW EMPLOYEES IN DEFERRED COMPENSATION PROGRAM.
Presented by: Chris Chronis, Chief Financial Officer.
RECOMMENDED ACTION: Adopt the procedures for auto-enrollment of new employees in the deferred compensation program and authorize execution of an Automatic Enrollment Services Election Form.
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In 2007 the BOCC adopted the attached Section 457(b) Deferred Compensation Plan and Trust Agreement ("Plan Document'), thereby establishing a supplemental retirement program for use by county employees. The 2007 Plan Document replaced one that had originally been adopted about 35 years earlier. It sets the ground rules for employee eligibility and participation in the program. Much like more commonly known 401(k) programs in the private sector, the 457(b) program enables county employees to divert a portion of their county pay to an investment account and, depending on choices made individually by each participating employee, avoid paying income taxes on the diverted income until it is withdrawn after age 59½ or avoid paying income taxes on all investment income earned by the investment account.
Participation in the deferred compensation program is important. Many employees don't work for the county long enough to earn a pension from KPERS or KP&F, and so money set aside in the 457(b) plan may be the only retirement income other than Social Security available to them based on their years of service here. Even for employees who do work long enough to earn a KPERS or KP&F pension, the benefit provided by those plans is too small, even when combined with Social Security, to enable a standard of living similar to that enjoyed before retirement.
Yet participation in the deferred compensation program is low. Like people everywhere, once many county employees grow accustomed to a certain amount of take-home pay they find it difficult to scale back their personal expenses in order to divert income to a retirement account. Only about 31% of ...
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