North Carolina State Treasurer Dale Folwell has submitted a framework for draft legislation that introduces a monthly $25 employer match for nearly 350,000 active members in the Teachers’ and State Employees’ Retirement System (TSERS), Consolidated Judicial Retirement System (CJRS), Legislative Retirement System (LRS), and the Optional Retirement Program (ORP).
Folwell said in a press release the legislation would attempt to close the 40% participation gap between state and local employees.
“State employees are participating in the NC 401k Plan at a rate less than one-half of local government employees,” said Folwell. “This is a monumental gap that we must address. It is not enough to simply offer an avenue to save. We must provide an incentive that will encourage action.”
Approximately 70% of local government employees actively contribute to the NC 401k Plan, with 550 employers offering a match or contribution.
Folwell also stated that most people will need more to meet the recommended 80% of pre-retirement income.
The Supplemental Income Matching Program through Legislative Enactment (SIMPLE) presents an incentive for teachers and state employees to actively participate in the state-sponsored NC 401k Plan. Members currently contribute 6% each month to the North Carolina Retirement System. Overseen by the Department of State Treasurer and the Supplemental Board of Trustees, the NC 401k Plan offers an additional retirement savings option for North Carolina’s public servants.
While $25 may seem like a small monthly amount, Folwell said it adds up to tens of millions of dollars in appropriations by the General Assembly.
“We hope that with all of the billions of dollars of surplus funds that have accumulated in the state budget that it would be recognized this is the best possible time to launch this common-sense initiative,” Folwell said in an emailed statement to Carolina Journal. “The SIMPLE Act is not a major program that would require hefty appropriations. We believe it is a wise investment that could be a major tool in terms of making job recruitment for state government more competitive and successful.”
Folwell’s office told CJ that a bill would need to be submitted and passed, or the same goal could be accomplished more simply by adding a provision into the budget bill. As of Thursday afternoon, the treasurer’s office had not hear back from any lawmakers.
“My goal is to make sure that there is a benefit to all, but especially to those who are on the lower end of the pay scale,” he said in the press release “Providing a flat dollar match rewards hard work and participation, giving those that need it most an incentive to not only save but remain constant in their contributions. With over 100,000 members in the eligible population earning less than $40k per year, there is a substantiated need to provide a path to retirement readiness.”
The North Carolina Supplemental Retirement Plans (NC 401k and NC 457 Plans), in addition to the state pension plan, are exclusively available to public servants in North Carolina. The Plans are administered by the North Carolina Department of State Treasurer (DST) and the Board and offered by more than 1,100 public employers, including state agencies, local governments, school districts, and community colleges. For more information, visit myNCPlans.com.