August 17, 2017
August 17, 2017
VSEA Non-Management Unit Members:
Your rank-and-file, Non-Management Unit (NMU) Bargaining Team is already hard at work preparing for upcoming negotiations with the State this fall on a successor agreement to our current contract.
In advance of this fall’s negotiations, your Bargaining Team wanted to ask NMU members how they felt about the Team either agreeing to or rejecting the following language:
“All newly hired state employees belonging to VSEA’s Non-Management Unit will be automatically enrolled to contribute 1 percent of their salary into a 457 Deferred Compensation Retirement Plan.”
Please Note: The 457 auto-enrollment language was proposed to the NMU bargaining team by VSEA’s three elected representatives to the State Retirement Board, which administers the 457 plan. They report that auto-enrollment is a simple administrative change to the paperwork at the time of the new employee’s hire. The big change here is that new state employees are automatically enrolled in the 457 but do have the option to opt out within 90 days by signing a form to decline enrollment.
What Language Would Do:
- Impact new hires only;
- Automatically deduct 1 % of member’s pre-tax income;
- Protect member in the event of a fund name change by ensuring safe transition to a Stable Value Fund or similar equivalent; and
- Provides member with a 90-day opt out (this is the max allowable) period if they change their mind.
Other Background on 457 Auto-Enrollment:
- This is an all-or-nothing proposal, meaning all VSEA Bargaining Units on state payroll must be on board, as the State will only agree to the 457 auto-enrollment if this is the case. VSEA’s Supervisory, Corrections, Judiciary and Defender General Unit’s have already approved auto-enrollment and so has the Vermont Trooper’s Association.
- Other states and government entities who have auto-enrolled employees with Empower (which would be VSEA’s 457 administrator) report retaining a 94% to 97% of the new employees;
- Right now in Vermont, less than 50% of new employees choose to enroll in the 457 option, and some might not even know they have the option;
- Once members enroll, they can engage earlier in preparation for supplemental retirement income;
- Auto-enroll permits the administrator to engage new employees right away, without having to physically sign them up;
- If approved, the Department of Human Resources will post information about auto-enrollment on its website orientation page for new employees, letting employees know about auto-enroll and their ability to opt out anytime for up to 90 days;
- Employees can always stop contributing if they choose;
- This auto-enrollment will help provide retirement security to future generations of state employees; and, finally, most important
- This has absolutely no impact to members’ existing VSEA Defined Benefit Retirement Plan…ZERO.
Thanks in advance for your participation.
You have already submitted this questionnaire.Thank you!
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