A Review of the Mississippi Government Employees’ Deferred Compensation Plan and Trust
Executive Summary
Background
MISS. CODE ANN. Section 25-11-101 authorizes the PEER Committee to "have performed random actuarial evaluations, as necessary, of the funds and expenses of the Public Employees’ Retirement System and to make annual reports to the Legislature on the financial soundness of the system."
Deferred Compensation is a supplemental savings plan administered by the Public Employees’ Retirement System (PERS) Board of Trustees. Any employee, elected official, or independent contractor of the State of Mississippi or one of its political subdivisions is eligible to participate in Deferred Compensation. A participant’s current income taxes are reduced because the participant defers part of his or her salary and does not pay federal and state income taxes on those contributions until withdrawal of the funds. Interest and savings on the contributions are also tax deferred until withdrawal.
Participants in the Deferred Compensation Plan may elect to invest in any of ten funds. The PERS Board is responsible for fund selection and has contracted with Systematized Benefits Administrators, Inc., to provide administrative, marketing, and recordkeeping services.
The PEER Committee contracted with Bryan, Pendleton, Swats and McAllister, Actuaries and Consultants, to review the Mississippi Government Employees’ Deferred Compensation Plan and Trust. Bryan, Pendleton made the following conclusions.
PERS Has Administered the Deferred Compensation Plan in Compliance with Applicable State and Federal Laws
Although PERS has administered the plan in accordance with state and federal laws, drafting errors and omissions in the plan document should be addressed. Also, PERS should take more care in communicating the salary deferral limitations to employees, since these limitations take into account amounts deferred under other plans to which state employees may have access.
The Level of Administrative Services and the Fees Charged by the Contractor are Appropriate and Customary for the Industry
Major enhancements in plan administration over the last several years include:
• Funds and participant accounts are valued on a daily basis, which allows employees to move money between funds with little restrictions as to timing.
• Participants may use a toll-free telephone number to check account values, change allocation of contributions, and move money among funds.
• Participants may access their accounts through a website.
The Plan’s Investment Fund Offering Contains Redundancy of Some Types of Funds and Lacks Other Types of Funds
The plan’s offering of ten investment funds contains several funds of the same or similar asset classification. The offering lacks a small capitalization domestic equity fund for the more aggressive investor and should add several asset allocation funds for the less sophisticated investor.