Planning for retirement
Miami-Dade County, Fla., is responsible for providing retirement benefits for 28,000 employees. Through a combination of pensions and deferred compensation plans with a wide variety of options, the county tries to keep its retirement benefits competitive with those offered by the private sector. This year, county employees gained a new online tool for planning the investments in their retirement portfolios.
The bedrock of Miami-Dade’s retirement plan is the statewide pension fund, the Florida Retirement System. By law, every county employee is a compulsory member of that system when they are hired. Miami-Dade contributes to the fund on behalf of all employees, who, after at least six years of service, can collect a defined benefit pension upon retirement.
In March 2002, the system introduced an alternative defined contribution plan that provides employees with more than 40 investment choices and a variety of benefit distribution options. Unlike the defined benefit plan, the value of employees’ accounts in the defined contribution plan is not fixed and depends on the performance of their investments. Miami-Dade contributes $199.55 million annually to the pension system.
Besides receiving pensions, Miami-Dade employees can direct a percentage of their pre-tax earnings to two different deferred compensation 457 plans provided by Columbus, Ohio-based Nationwide Retirement Solutions (NRS) and Washington, D.C.-based ICMA Retirement Corp. The deferred compensation plans do not cost the county any money because the county does not match employees’ contributions, and participants pay all account administrative fees. Currently, approximately 15,000 employees participate in those plans, which offer a combined 125 investment options.
With a large variety of investment possibilities, employees could become overwhelmed. “They have so many investment options,” says Daniel Gonzales, employee benefits supervisor in the county’s Risk Management Department. “Sometimes it’s too much for the employees.”
To help employees understand their options, Nationwide introduced an online planning tool provided by Chicago-based Morningstar with which employees can research investments, learn about planning for their retirement, seek advice and measure their accounts’ performance. Besides viewing the performance of their NRS accounts, employees can submit information about outside investments or spouses’ retirement plans to view a complete picture of their assets. “Some people have other assets that they want to incorporate in the big picture,” Gonzales says. “If their spouse has a 401(k), they’ll be able to see that information loaded in there.”
Employees also can meet with representatives from the deferred compensation plan providers to discuss problems or questions about their accounts. Because the Risk Management Department only has three employees, it relies heavily on the representatives’ expertise and availability. “We want our reps to be out in the field and educating our employees because we aren’t staffed to do that,” Gonzales says.
The combination of pension benefits and deferred compensation benefits keeps Miami-Dade competitive with private employers, Gonzales says. “We have the best of both worlds,” he says. “We don’t have the huge private sector salaries, but, in the end, I think most of our employees retire in pretty good standing and live a nice retirement.”