Public DC Plan Design.
Byline: Kevin McGuinness
Summary paragraph: Adding auto-escalation
As state and local governments continue to modify their retirement packages, public employees may need to save more for retirement, a new study suggests.
The study, "Using Automatic Escalation in Public Sector Retirement Plans to Increase Savings," from the Center for State and Local Government Excellence, suggests that one way supplemental retirement savings plans for public employees could be enhanced is by including automatic deferral escalation. The study report highlights the challenges and opportunities state and local governments face as they consider instituting automatic escalation plan features.
Paula Sanford, a public service and outreach faculty member at the Carl Vinson Institute of Government at the University of Georgia, examined automatic escalation options for public sector defined contribution (DC) plans to help employees boost their retirement savings.
Using interviews, case studies, and a review of academic and practitioner research, Sanford offers recommendations for how state and local governments might incorporate automatic escalation into their defined contribution plans. Her suggestions include:
* Ensuring that employee groups are part of the process in working with elected and appointed leaders who support an automatic escalation policy;
* Acknowledging there is no uniform approach to auto-escalation features and choosing a policy that reflects a government's unique work-force preferences;
* Reducing or eliminating as many barriers to enrollment as possible;
* Communicating with employees about the benefits of the feature once adopted; and
* Considering implementation of the auto-escalation feature in conjunction with other plan features, such as auto-enrollment.