While Alaska’s decision to implement automatic enrollment was due to a special circumstance—the defined-benefit plan was closed to new employees—Seller says he expects others to follow Alaska’s lead.
Several calls to Richard Shafer, chief investment officer at Alaska State Pension Investment Board, were not returned.
Michael Halpin, executive director of the $2 billion Maryland Teachers & State Employees Supplemental Retirement Plans in
“The big issue for public plans is whether the compensation is already in the employees’ salary that makes automatic enrollment affordable for the state. It’s a very different perspective for corporate plans. But it is something that is being discussed and it is a possibility for us,” he says.
It is more challenging to implement automatic enrollment in the public sector because state legislatures must specifically allow the feature because of legal issues over garnisheeing wages.
Suzanne Kubec, defined-contribution plan administrator for the $302 million Colorado Deferred Compensation Plan in
The Indiana State Deferred Compensation Fund in
The Pension Protection Act “brought the issue to the front burner. There are budgetary issues, but the board has discussed it as a possible enhancement,” Heinzmann says.
Leighann Hinkle, deferred compensation administrator for the $250 million State of
“It’s a great idea for private-sector companies that are dissolving their DB plans. But with the passage of the [Pension Protection Act], it is on the forefront of everyone’s minds, including state plans,” says Hinkle, adding that
“[Fidelity] suggested that we take a look at it. We are discussing whether this makes sense for us,” says Hinkle, adding that it will be on the agenda early next year.
Not a top priority
Thomas Woodruff, director of the retirement and benefits division of the Connecticut State Employees Retirement Commission in
“There are very different issues for the public sector. For
Nationwide Financial Services in
“We don’t have any public-sector clients that currently offer [automatic enrollment], but we have several that are very interested and are close to implementing,” he says, declining to name the clients.
“We’re very excited about auto enrollment because today inertia works against us. With auto-enrollment, inertia works in the benefit of folks’ retirement,” he says, adding that the average participation rate in Nationwide’s public-sector plans is 30 percent.
--Jenna Gottlieb is a reporter for Pensions & Investments, a sister publication of Workforce Management.