September 24, 2011

A Suggestion for Employers of (Georgia's) Educators

I have been thinking about this post for months (since December actually), and after talking to various educators, administrators, and colleagues over a number of months and years, there are a great many things that always seem to come up.
  • Most educators don't think about or discuss their retirements with anyone until the last few years before retirement.
  • While most educators seem to have at least a basic understanding of their pension benefits,
    • they have little or no comprehension of their Social Security benefits (or lack there of)
    • they do not realize the opportunity they are missing by not contributing to a retirement plan/account
  • Employers hold employee orientations that cover retirement benefits, but (based on my conversations with educators) there is so much information giving in the 1-2 day orientation that most educators ignore the retirement section (usually part of the new employee orientation).
There are many things that I could say here to employers (school systems), but the bottom line is simple - Educate the Educators. That's it.

Essentially, employers should set aside time to educate their employees on the various retirement benefits that they have and that they could receive as well as those they will not. If the employer withholds Social Security or does not, they should explain what it means to the employees. They should make sure to stress the need for 403(b) accounts, discussions on TRS benefits, and more - throughout their employment and not just before the last few years of service.

I had one administrator tell me that if they told their employees about (not paying in to) Social Security it would scare them. Well, maybe it should. 

In the private sector, employers and other employees stress the need to contribute to retirement accounts - 401(k), IRAs, etc. In the public sector, I have failed to see a similar push. I believe that most people see their pensions as enough, and when you toss in Social Security, they are quite sure they are set... BUT, what if they receive little or no Social Security - ever? Does the employer have a responsibility to explain this to the employee?

Granted, I have not compiled a list (or know of one) of which counties have opted out of Social Security in Georgia, but in those counties especially, the need to educate your educators is immense. They could be completely and literally blindsided by the effects of not contributing to Social Security (yes, I mean the WEP and GPO).

In some counties, employees are forced to contribute to mandatory 403(b) accounts usually with employers contributing as well. I have heard many educators complain about this and think that it is "unfair" for the county to force them to contribute. When I have discussed and explained the issue with them, the vast majority usually change their tune. It's not that they are against it, but that they do not understand why it is being done. That to me is the problem... educators may not understand it, and if employers only discuss it with them on a few occasions, educators could miss an opportunity to help themselves.

One final note is that employers do not need to get the same people selling the 403(b) accounts to the educators to give the information about the benefits of investing in the 403(b) accounts.  They need to find an unbiased voice that will explain the issues of the WEP and GPO to the educators, and from there, show that investing in 403(b) accounts is the best way to safeguard their retirements.  Just my humble opinion.

1 comment:

Jimmie Jenkins said...

I agree with your article. I am now feeling the effects of no proper explanations in 1983 when my county opted out of SS. We were improperly advised with no mention of WEP or GPO. Now at age 64 I receive no SS benefits ( individual or spousal) because I lack 12 credits and my TRS pension is too much to receive any spousal benefits. This is totally unfair to those that had to go with no SS depending on the total vote in 1983. I believe the school systems that forced this issue without proper explanation or pushing other retirement plans should be held accountable.

Thanks for your comments. Jimmie