Last week, the State Treasurer’s Office announced a 12-month waiver extension for its administrative fee, which was unanimously approved by State Treasurer Brad Briner and the North Carolina Supplemental Retirement Board of Trustees.
This action impacts participants in the N.C. 401(k) and N.C. 457 Plans, which are offered to public servants and are among the largest and cheapest public retirement plans in the country. Administered by the N.C. Department of State Treasurer and the N.C. Supplemental Retirement Board of Trustees, the plans are available through over 1,000 public employers, including state agencies, local governments, school districts and community colleges.
An administrative fee is a small charge taken from participants’ accounts to cover the costs of running the retirement plan. The fee waiver is projected to save participants $1.7 million over the next year, starting March 1, with savings of 10 cents for every $1,000 in an account.
By removing this fee, employees will retain more of their retirement savings, N.C. Rep. Renée Price (D-Caswell, Orange) said. She said individuals no longer have to pay the fee, as the state covers the cost instead.
“I hope that all employees appreciate this extension,” Price said.
Jeff Hancock, director of supplemental retirement plans for N.C., said that a review of reserve accounts — funds set aside by the state to cover future expenses or unexpected financial needs — showed there were enough funds to cover the upcoming year’s administrative fees in January.
Revenue to cover the fees comes from reserve account investments and interest on account balances, Hancock said. He also said the waiver does not impact the state’s broader pension system or economy, aside from allowing participants to keep more money in their accounts.
“This leaves money in the participant’s pocket that would otherwise come out that will help them grow their retirement balances,” Hancock said.
Given the increasing costs of living, health care and utilities, Price said that any cost savings are valuable for retirees. She said there are concerns about the necessity of administrative fees and stressed the importance of transparency in utility and service charges.