Benefits October 7, 2011
NC Health System Moves to 401(a), 457 Plan Offering
October 7, 2011 (PLANSPONSOR.com) - Johnston County, North Carolina's hospital system is implementing cost-saving measures - including enrolling new hires in what it says is a cheaper retirement program.
Reported by Rebecca Moore
The Johnston County Herald reports that in the spring, the hospital system got permission from the North Carolina General Assembly to end participation in the state employees’ retirement system for employees hired after October 1. New hires may enroll instead in a combination 401(a) and 457(b) account.
Johnston Health will match 50% of employee contributions up to 5% of their pay, plus a “discretionary payment” of 2% of salaries for employees who qualify. Employees will be eligible for retirement at 65 with at least five years of service or at 55 with at least 20 years of service.
According to the news report, the state employees’ plan requires workers to contribute 6% of their pay. Retirement benefits are based on an employee’s average salary in their four highest-paid years in a row, plus their years of service to the state. Hospital leaders noted that participating in the state employees’ system was costing $2.9 million a year – or 16% of the hospital system’s employee benefits budget.