Responding Agencies

We received a total of 96 responses to our retirement benefits survey. This is approximately one third of our 300 subscribers. Only 3 agencies out of the 96 did not have a retirement plan in place. Quite honestly, I was surprised at the number of agencies that had retirement plans. I thought that less than 20% would have a retirement plan.

The responding agencies ranged in size from 20 employees to over 700 employees. The largest responder was a $42 million agency. One retirement plan had been in effect over 50 years, while another plan was in effect for only 9 months.

Employer Contributions

Almost all of the agencies (82 of the 93 agencies with plans) contributed money to the plans. Most (77) made a contribution based upon a percentage, while 5 of the plans based the contribution on a specific dollar amount. The percentage ranged from 1% to 15%. In 19 agencies, the agency provides a matching contribution to the amount contributed by the employee. It appeared that all agencies with matching contributions had a maximum limit for the agency share.

Types of Plans

The following types of plans were utilized by responding agencies:

• 24 had a defined benefit plan, designed to provide a specific benefit to employees
• 46 had a defined contribution plan, designed so that the benefit is based upon the accumulation of contributions and earnings
• 46 had a Tax Sheltered Annuity plan (403(b)), funds placed directly in an annuity plan, typically with an insurance company
• 9 had an Employee Deferral Plan (401(k))

The total is larger than the number of agencies with plans, because some agencies provide more than one type of plan or the responder was not sure of the type of plan and answered to more than one.

Vesting

Vesting refers to when the funds put into the plan belong to the individual participants. We were surprised at the wide variety of vesting provisions. Most (44%) of the plans fully vest when the funds are put into the plans. Others vested at a set percentage each year, and the most common of these was 20% per year for five years. One plan had a gradual vesting that would take 20 years for the funds to fully vest to the participant.

Some plans provided for complete vesting after a set period of time, with no vesting until that time had occurred. For example, full vesting occurred in one plan after 6 months and in another after 7 years. In these plans, an employee would lose all benefits if they left prior to the set period.

Investments

The following list shows how plan funds are invested:

• Mutual funds-37 plans
• Insurance company-18 plans
• Employee choose-13 plans
• State-6 plans
• Money market-2
• Annuity-2
• Stocks-1
• Government bonds-1
• Various-9

Commonalties

The following comments are our observations based upon the surveys returned to us, and are not statistically valid nor are they recommendations.

Today, in order to compete for employees, more and more grant funded agencies are offering retirement benefits to their employees. It appears that many plans have the following:

• Defined contribution plan.
• Based upon a percentage of employee earnings.
• Allows the employee to contribute funds to the plan.
• Provides matching by the employer to encourage employee contribution.
• Vests immediately.
• Invested in mutual funds.

Employee only Tax Sheltered Annuity Plans used to be the most common plan, but they are being replaced by employer funded plans.

To view a copy of the questionnaire that was used or a straight summary of the answers to the questions, except for agency names or other identifying information click on the one of the following buttons.