LANSING, Mich.--(BUSINESS WIRE)--Michigan teachers should have the right to save for retirement with the provider and advisor of their choice, according to a bill currently before the Michigan House of Representatives. HB 4338, on which the House Committee on Financial Liability Reform heard testimony yesterday, would permit alternate providers in the state 457(b) plan to break the current single-provider monopoly. The expectation is that matching contributions to the hybrid defined contribution plan will include local choice of providers.
Testifying before the committee yesterday was Rich Williams, president and CEO of Williams & Co., a PlanMember Financial Center located in Grandville, Mich.
“The unintended consequences of pension reform have caused limited financial advice for new teachers,” Williams told the committee. “Most people will only contribute the amount needed to get the matching funds and consequently their retirement is woefully underfunded. Today, there are 20,000 school employees, most of whom have no idea where their money is invested, and what they need to do to successfully retire.”
Research compiled by the National Tax-Deferred Savings Association in Arlington, Va. shows that eliminating employees’ choice significantly reduces participation in voluntary retirement plans. In Southern California, for example, 50% of workers stopped contributing to their 403(b) plans when their existing provider was no longer available. In one Colorado school district, the number of contributing participants dropped by approximately 54% when a single-provider approach was adopted.
“HB 4338 is about providing choice to school employees,” Williams said. “Each employee’s retirement planning needs are unique. Currently, for retirement planning advice through state administrative and human resources offices, employees are provided with a business card containing a website and toll-free number. For some employees that may work, but for most it does not. HB 4338 is about providing choice; it allows public school employees the ability to choose the path for retirement planning that is best for their families’ own circumstances and goals.”
PlanMember Securities Corporation is a registered broker/dealer, investment advisor, insurance licensed in all 50 states and member FINRA/SIPC. Williams and Company is one of PlanMember’s independently owned and operated Financial Centers.