“Supplemental Retirement Plans Offered by City and County Governments,” from the Center for State and Local Government Excellence, examines 20 municipalities around the United States and finds 457 plans are the dominant supplemental plan type (see “457 Plan Reflections”), with almost all plans being locally managed and using a single vendor. Some municipalities offer 401(k) plans, with a few offering 401(a) and 403(b) plans.
“With the recent recession and the aging of the Baby Boomer population, there has been a growing concern about the financial status of public pension funds and the financial sustainability of governmental spending on retirement benefits,” say the authors of the brief. “If future generations of public employees are going to have adequate retirement income, they will need to save more, both on their own and through supplemental retirement saving plans.”
The brief also finds that with these supplemental plans:
- The number of investment options differs;
- While most allow loans, only four of the 20 plans studied have employer matching contributions; and
- Employees have access to information about the plans from local employer, vendor or state websites, high-quality information is not always available.
According to the authors of the brief, “To understand the importance of 457 and 401(k) plans for city and county employees more fully, it is important to determine participation and contributions rates, and to determine whether the factors highlighted in this brief influence employee retirement savings behavior.”
A copy of the brief can be downloaded here.
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