Massachusetts deferred compensation plan passes $10B asset mark
The deferred compensation plan for Massachusetts employees has surpassed $10 billion in assets under management thanks to outreach and education, according to state Treasurer Deborah Goldberg.
"We are pleased to have hit this impressive milestone," Goldberg said. "We've been working at getting people to contribute more than what their pensions might cover. Our Treasury has done a great deal of public outreach."
The Save Money And Retire Tomorrow, or Smart Plan, which originated in 1977, is a voluntary 457(b) governmental defined-contribution plan available to all state and participating municipal employees.
Plan assets have risen to $10.06 billion as of Dec. 30 from $4.5 billion in 2009. The plan now has more than 109,000 full-time employees and 178,000 part-time employees with active accounts.
The plan is designed to help Massachusetts public sector employees supplement their pension benefits and lessen the impact public service employment may have on accrued Social Security benefits. Eligible employees can save and invest before-tax and after-tax dollars through salary deferrals into an array of investment options.
Plan resources include newsletters and online seminars that include topics, such as asset diversification, active vs. passive asset investing and stress management.
Goldberg, in her second term, is the new president of the National Association of State Treasurers. First elected in 2014, she is among a wave of state fiscal officers who have been balancing traditional fiduciary duties with advocacy and community outreach.
Shortly after election to her first four-year term in 2014, Goldberg noticed common concerns among her peers. "People are very concerned about the financial ramifications of retirement."
Goldberg said her department this year expects to further build out its defined-contribution program, the Core Plan, which stands for Connecting Organizations to Retirement. Core is a multiple employer 401(k) plan available to Massachusetts nonprofit organizations with 20 or fewer employees.
"We want to try to expand Core," she said.
Also, the commonwealth last week commenced its first statewide college savings account program for newborns, the BabySteps Savings Plan. Every child born or adopted as a Massachusetts resident will be eligible for a free $50 deposit into a 529 college or vocational savings account.
"All they have to do is check a box on the birth certificate," she said of the program, which builds on two pilots called SeedMA and SoarMA. The new plan will also include free financial education services to families throughout the commonwealth.
According to Goldberg, common access to post-high school education and training is vital to economic mobility and stability. She cited research that indicates children with college savings accounts are three times more likely to attain higher education.
Massachusetts enters a busy winter of bond activity armed with its latest deposit into the stabilization fund. The commonwealth's rainy-day balance, according to Goldberg, is now above $3.4 billion, putting it fourth in the U.S.
"The rating agencies should be very pleased," she said.