Tuesday, December 08, 2015

Sound of Silence


There is a deficit in leadership in this country on the issue of public school employee supplemental retirement programs and it’s hurting everyone (employees, employers, students and taxpayers). That sound you hear coming from the unions, district administrators and politicians is…silence.
No more. It’s time for change. The great rock band Pink Floyd sang:

Don’t accept that what’s happening
Is just a case of others’ suffering
Or you’ll find that you’re joining in 
The turning away

While I certainly won’t compare the suffering referred to in the song (On The Turning Away) to school employee retirement, it’s time we stop accepting what happening with school employee retirement plans.

For decades their has been to much silence. But over the past decade you might say the speechless have united in a silent accord (see what I did there Pink Floyd fans?). It’s time for that silent accord to become vocal. It’s time to stop being Comfortably Numb (just couldn’t help myself). It’s time to change shadow to light (I know, I’ll stop).

I’m calling on government leaders, unions, associations, teachers, school employees and fiduciary financial planners to turn on, tune in and drop in to fighting for what is right for school employee retirement plans.

There are many reasons that 403(b) and 457(b) plans are ignored by school business officials and unions, but among the most is important is that they are busy doing things that are, in the scheme of things, more important. School safety (especially poignant after the most recent shooting in San Bernardino), positive learning environments, balanced budgets and community involvemnt are much higher on the list for administrators than a supplemental retirement plan, especially since school employees have a pension. However, the reality is that school employees who feel more secure financially will be more productive, more tuned in to their work and more likely to retire at a normal retirement age — all goals for any School Administrator or Superintendent.

One way to feel more secure financially is through consistent contributions to 403(b) & 457(b) retirement plans that are operated in a manner that is in the best interest of participants. In addition, auto-enroll and auto-escalate are needed (not as much as in the private sector, but still a big need).
Right now there is almost no fiduciary responsibility for 403(b) and 457(b) plans across America. The silence is deafening. If you ask a Chief Business Officer of a school district, they’d rather not think about fiduciary responsibility and would likely whisper to you that they don’t want it. The last thing school officials want is to be subject to ERISA and all the headaches that come with it. I can sympathize with this point of view. But school employee’s retirements are suffering because of it and their productivity is most certainly lower as well.

How can we provide for better retirement outcomes without burdening school officials with overly complicated rules and regulations? This is the question that must be answered. I believe one answer to this are state run retirement programs that accept the fiduciary burden and essentially do the work for the school employers (similar to how they currently do it on the defined benefit side).
What are your ideas?


Some of us have been very vocal over the years and at least one politician has been very good on the issues, but it isn’t enough to defeat the forces that seek to undermine retirement security for educators (while proclaiming they are doing the opposite). It’s time to join the fight.

Scott Dauenhauer, CFP, MPAS, AIF

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