From: GOVERNING Management
To: Scott Jenkins,
Subject: An Effortless Way to Save for Retirement
Date: Thu Jun 19 17:11:45 MDT 2014
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An Effortless Way to Save for Retirement

BY HEATHER KERRIGAN

Between 2009 and 2013, all but two states made some change to their retirement benefit plans, most of which have been to the detriment of public employees who now need to work longer or save more to enjoy the same financial comfort in retirement as their predecessors.

To try to make up for the losses, states are slowly offering supplemental defined-contribution (DC) plans that contribute a set portion of employees' paychecks toward their retirement. To encourage employees to participate, some states require new hires to opt out of the plan (this is called automatic enrollment) and some automatically increase their contribution each year (this is called automatic escalation).

Defined-contribution plans and their accompanying automatic features are far more popular in the private sector but are gaining traction in the public sector. According to a survey of private-sector organizations by the Defined Contribution Institutional Investment Association (DCIIA), 56 percent of respondents offer automatic enrollment in their supplemental DC plans and about 25 percent have automatic escalation. Comparatively, the National Association of Government Defined Contribution Administrators (NAGDCA) found in two separate surveys that only 8 percent of supplemental DC plans in the public sector have automatic enrollment and only seven states (including Missouri, Ohio, Texas and Virginia) and one local government offer automatic escalation. Three states, though, are currently considering adding automatic escalation.

Behavioral economics research shows that employees often are not inclined to save and aren't sure how much to save or how to invest, so automatic enrollment and escalation make the decisions people have trouble making themselves.

Keith Overly is the executive director of Ohio's supplemental DC plan for state employees, which local employees can also take advantage of. He says the group worked with behavioral economists before deciding to implement automatic escalation about six years ago. (In 2013, it started a pilot program to test automatic enrollment as well). Ohio's plan (known as Ohio Deferred Compensation or Ohio 457) is offered as an option to employees in the five primary statewide retirement systems, and it currently has approximately 180,000 active and inactive participants with roughly 60% of current state employees participating, according to Overly.

"We don't believe people save enough right now for retirement," said Overly, adding that for some people (especially younger employees), retirement is "out of sight, out of mind."

According to Overly, nationwide studies show that a lot of people enroll in supplemental retirement plans but ten years later, they haven't increased their contributions even though their salary has grown. Keep Reading >>

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IBM's Next-Generation Smart City Solutions

With the launch of its next-generation smart city solutions, IBM has directed its thinking toward three main themes, which are tailored for cities, holistic in their execution, and interconnected. These are: Planning and Management, Infrastructure Planning, and Human Services.
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The B&G Report

BY KATHERINE BARRETT & RICHARD GREENE

Do you work for a government agency with a waiting list for services -- like one that deals with public housing, Medicaid waivers or state-subsidized child care? This topic is pretty hot in the news, given the scandalous breakdown of waiting list processes at the Veterans Administration, which allowed tens of thousands of former military personnel to languish while awaiting care. But we’re curious to know whether there are many instances of waiting list problems at the state and local levels. We’d appreciate hearing from any readers with experience dealing with this issue. We’ll happily keep your comments off the record if you’d prefer.

Many cities and states give preferences to minority-owned companies when awarding contracts. This is a complicated area; square in the intersection of social and fiscal policy. We’re not going to begin to address the pros and cons in a general sense, but we’ve repeatedly heard about instances in which the minority groups also get the minority of the benefits from government contracts.

On May 8, 2014, Dennis Gallagher, the auditor of the city and county of Denver, wrote a letter to the city’s mayor, Michael Hancock, about a $39.6 million contract related to the city’s new hotel and transit center. The minority-held company that got the contract turns out to only get two percent of the payments as a transaction fee for “processing the paper work of the subcontractors it has retained to actually do the work.” One of these subcontractors alone is getting more than half the funds, some $23 million. According to the auditor that organization is not minority-owned.

The auditor continues, “I cannot believe that is what was intended with the award.” Neither can we. Keep Reading >>

 

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