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By JEFF AMY
JACKSON â€” A study of a special retirement savings plan for Mississippi public university employees recommends changing how the stateâ€™s contribution levels are set.
The Optional Retirement Plan covers more than 4,000 employees. Professors, administrators, coaches, researchers, medical residents and others may join plan, instead of the traditional state pension system. The optional plan is meant to provide retirement savings to people who may leave state employment before the eight years of service that are needed to earn a regular pension.
Now, universities put the same share of employee salaries into the 401(k)-like accounts as schools contribute for employees in the traditional pension. The proposal, requiring legislative approval, could help universities hold down future contributions.
A study committee recommended keeping the rest of the plan largely the same, rejecting the option of allowing employees to later transfer to a traditional pension. The committee also recommended that those who have entered the special plan should stay in if they move to another state university position thatâ€™s not eligible.
The Optional Retirement Plan was created in 1990 to help recruit professors and administrators. Because those people often move from state to state as their career advances, they might be turned off by having to stay at a Mississippi public university for eight years to gain any retirement benefit.
â€śItâ€™s critical to the recruiting capability,â€ť Cheryl Mowdy, the College Boardâ€™s assistant commissioner for finance and administration, said after a Thursday board meeting.
Employees must choose to enter the optional plan within 30 days of starting work, and arenâ€™t allowed to later change to the traditional pension.
â€śOnce youâ€™re in, you canâ€™t go back,â€ť said Pat Roberston, executive director of the Public Employees Retirement System.
When the optional plan was set up, lawmakers decided that the state and the employees would each contribute the same percentage of salary as in the traditional pension. Both the employee and employer contribution rates have risen in recent years as the traditional pension has struggled to make up for fallen investment values and the need to cover benefit increases.
This year, employees are contributing 9 percent of their salary to both the optional and traditional plans, and the state is contributing 12.93 percent. Optional plan participants get about 80 percent of the overall state contribution, with the rest being automatically shipped to the traditional plan to cover past shortfalls there.
Mowdy said that the College Board wants to avoid future increases in contributions.
â€śWhat we propose is it stays at the current rate,â€ť Mowdy said.
She said the board plans to hear from university human resource directors in February before seeking legislation needed for changes. Thatâ€™s close to the Legislatureâ€™s Feb. 20 bill-filing deadline, which means legislation might not be considered until 2013.
Committee members considered allowing a larger group of university employees into the plan, but recommended against it. The report said the current setup â€śmeets the intended objective of better enabling Mississippi to attract qualified and talented university staff.â€ť
Though the plan was created to attract people who donâ€™t plan on making a career in Mississippi, some do stay. The committee recommended against letting people reverse decisions and buy into the traditional pension plan.
Robertson said that if the College Board wants to let optional plan participants buy into the traditional pension, they should only be allowed to do so in the first five to eight years of employment.