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Nj 457 Plan

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Not specifically. Their web site (http://www.state.nj.us/treasury/pensions/fact32.htm) indicates it's a vanilla salary reduction-only 457 administered by Prudential. The plan document is accessible through the web site, at the "Information Statement" link. They appear to be phasing out 4 state-managed funds and replacing them with 23 Prudential-managed funds. The Prudential link seems to be dead, so it's hard to see what funds are available.

 

What are you interested in?

 

Tom Geer

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Guest Sierra

Not specifically. Their web site (http://www.state.nj.us/treasury/pensions/fact32.htm) indicates it's a vanilla salary reduction-only 457 administered by Prudential. The plan document is accessible through the web site, at the "Information Statement" link. They appear to be phasing out 4 state-managed funds and replacing them with 23 Prudential-managed funds. The Prudential link seems to be dead, so it's hard to see what funds are available.

 

What are you interested in?

 

Tom Geer

 

 

Tom: The State charged eight basis points. Prudential charges on average about 10 times more. Is anything being done about negotiating lower expense ratios? How could the State get away with this investor/participant abuse when fees are the topic of conversation all over the place?

 

 

 

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The 4 state-managed funds are closed to new money. I believe they have been closed out to new money for over a year. I also believe that the state hired Mercer Investment Consulting to advise them what to do with their administration of the 457 plan and they advised the State to go with Prudential. As I recall in the Codey and McGreevy administrations there was a push for the state to turn over some if not all of the pension money to private managers. I imagine that turning over the 457 administration to a third party was a "logical" step in their thought process. Before this happened, I was going to write to my assemblymen that the 457 plan should be opened up to teachers as the SACT plan (a 403b plan) is which I believe is still run by the State. The state could actually take some pride in the way they managed the SACT plan since it beat the S&P 500 over a 10 year period.

steve

 

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The 4 state-managed funds are closed to new money. I believe they have been closed out to new money for over a year. I also believe that the state hired Mercer Investment Consulting to advise them what to do with their administration of the 457 plan and they advised the State to go with Prudential. As I recall in the Codey and McGreevy administrations there was a push for the state to turn over some if not all of the pension money to private managers. I imagine that turning over the 457 administration to a third party was a "logical" step in their thought process. Before this happened, I was going to write to my assemblymen that the 457 plan should be opened up to teachers as the SACT plan (a 403b plan) is which I believe is still run by the State. The state could actually take some pride in the way they managed the SACT plan since it beat the S&P 500 over a 10 year period.

steve

 

 

And Steve, the SACT plan's expenses are paid for by the taxpayer. 100 cents on the dollar is invested. Imagine an expense ratio of zero basis points. So the state goes from that low cost extreme to a high cost 457(b) Plan with Prudential. These people do not have a clue! NYC employees including teachers have both a 457 and 401k with Target Date retirement funds charging 21 basis points. What are we chop liver? Let's do something about it. Any ideas?

 

Joel

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Joel,

 

I believe the only way that this can change is by writing to the state senators, assemblymen, the gov, and/or the State Treasurer. The most powerful voice would be the C.W.A, since I believe they represent most of the state workers, but I think they will be more interested in preventing the state from rolling back any of the pension benefits than trying to negotiate lower fees on the 457plan. The NJEA does not have a dog in this fight since teachers have no access to this plan. If one could get an audience with the state treasurer or whatever financial committee that is run at the Statehouse then that might be the best chance for change.

 

steve

 

 

And Steve, the SACT plan's expenses are paid for by the taxpayer. 100 cents on the dollar is invested. Imagine an expense ratio of zero basis points. So the state goes from that low cost extreme to a high cost 457(b) Plan with Prudential. These people do not have a clue! NYC employees including teachers have both a 457 and 401k with Target Date retirement funds charging 21 basis points. What are we chop liver? Let's do something about it. Any ideas?

 

Joel

 

 

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Guest Sierra

Joel,

 

I believe the only way that this can change is by writing to the state senators, assemblymen, the gov, and/or the State Treasurer. The most powerful voice would be the C.W.A, since I believe they represent most of the state workers, but I think they will be more interested in preventing the state from rolling back any of the pension benefits than trying to negotiate lower fees on the 457plan. The NJEA does not have a dog in this fight since teachers have no access to this plan. If one could get an audience with the state treasurer or whatever financial committee that is run at the Statehouse then that might be the best chance for change.

 

steve

 

 

And Steve, the SACT plan's expenses are paid for by the taxpayer. 100 cents on the dollar is invested. Imagine an expense ratio of zero basis points. So the state goes from that low cost extreme to a high cost 457(b) Plan with Prudential. These people do not have a clue! NYC employees including teachers have both a 457 and 401k with Target Date retirement funds charging 21 basis points. What are we chop liver? Let's do something about it. Any ideas?

 

Joel

 

 

The NJEA should place its dog in the fight and lobby for a change in the law that will allow local employers such as school districts to opt into the plan. After accomplishing that they should lobby the Deferred Compensation Board to revert back to the no-load investment lineup. They know damn well that the 403b sharks have been mutilating teachers for 45 years. Their unwillingness not to place their dog in the fight is simply a tacit endorsement of the 403b sharks to continue to do their mutilating. Here is a classic example of the average dues paying teacher being out to lunch for 45 years.

 

Joel

 

 

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Joel,

 

I do not disagree that the NJEA should lobby to improve the 457 plan and then lobby to have teachers able to contribute to the plan. However, I think the NJEA has not done their homework on retirement plans. In my local I had the approval of the union president to do what I thought was best to improve the retirement plans and I was able to get Vanguard for the 403B and looks like Fidelity for the 457. I wish I was able to get the ear of the NJEA president as easily. I also think it is not likely that the NJEA will fight for this at this moment since there is a greater concern for protecting the pension and the issue of spending caps on school districts.

 

Steve

 

The NJEA should place its dog in the fight and lobby for a change in the law that will allow local employers such as school districts to opt into the plan. After accomplishing that they should lobby the Deferred Compensation Board to revert back to the no-load investment lineup. They know damn well that the 403b sharks have been mutilating teachers for 45 years. Their unwillingness not to place their dog in the fight is simply a tacit endorsement of the 403b sharks to continue to do their mutilating. Here is a classic example of the average dues paying teacher being out to lunch for 45 years.

 

Joel

 

 

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Joel,

 

I do not disagree that the NJEA should lobby to improve the 457 plan and then lobby to have teachers able to contribute to the plan. However, I think the NJEA has not done their homework on retirement plans. In my local I had the approval of the union president to do what I thought was best to improve the retirement plans and I was able to get Vanguard for the 403B and looks like Fidelity for the 457. I wish I was able to get the ear of the NJEA president as easily. I also think it is not likely that the NJEA will fight for this at this moment since there is a greater concern for protecting the pension and the issue of spending caps on school districts.

 

Steve

 

The NJEA should place its dog in the fight and lobby for a change in the law that will allow local employers such as school districts to opt into the plan. After accomplishing that they should lobby the Deferred Compensation Board to revert back to the no-load investment lineup. They know damn well that the 403b sharks have been mutilating teachers for 45 years. Their unwillingness not to place their dog in the fight is simply a tacit endorsement of the 403b sharks to continue to do their mutilating. Here is a classic example of the average dues paying teacher being out to lunch for 45 years.

 

Joel

 

 

 

They haven't done the right thing in 45 years. So based on past behavior this "problem" will never be on their agenda. And by keeping it off their agenda they simply do not care that their members are being finacially mutilated. Again I ask: Why does the NYC Teachers union care? Why does the Wisconsin Education Association Care?

 

Peace,

Joel

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Not specifically. Their web site (http://www.state.nj.us/treasury/pensions/fact32.htm) indicates it's a vanilla salary reduction-only 457 administered by Prudential. The plan document is accessible through the web site, at the "Information Statement" link. They appear to be phasing out 4 state-managed funds and replacing them with 23 Prudential-managed funds. The Prudential link seems to be dead, so it's hard to see what funds are available.

 

What are you interested in?

 

Tom Geer

 

 

Tom: The State charged eight basis points. Prudential charges on average about 10 times more. Is anything being done about negotiating lower expense ratios? How could the State get away with this investor/participant abuse when fees are the topic of conversation all over the place?

 

 

All I know is what's on the web site. I'd call them and ask. One possibility is that fees that were not previously charged to assets are being charged to them now through the expense ratio. Another is that the state was subsidizing part of the cost and has now reduced that support.

 

Tom Geer

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Guest Sierra

 

 

Not specifically. Their web site (http://www.state.nj.us/treasury/pensions/fact32.htm) indicates it's a vanilla salary reduction-only 457 administered by Prudential. The plan document is accessible through the web site, at the "Information Statement" link. They appear to be phasing out 4 state-managed funds and replacing them with 23 Prudential-managed funds. The Prudential link seems to be dead, so it's hard to see what funds are available.

 

What are you interested in?

 

Tom Geer

 

 

Tom: The State charged eight basis points. Prudential charges on average about 10 times more. Is anything being done about negotiating lower expense ratios? How could the State get away with this investor/participant abuse when fees are the topic of conversation all over the place?

 

 

All I know is what's on the web site. I'd call them and ask. One possibility is that fees that were not previously charged to assets are being charged to them now through the expense ratio. Another is that the state was subsidizing part of the cost and has now reduced that support.

 

Tom Geer

 

When the Plan was run in house the participant paid ALL the fees...ALL THE FEES!! The state paid nothing, afterall it is a voluntary plan and the state is a not for profit entity. On the other hand, you can't expect Prudential to make a profit by charging 8 bp. The state has simply given it over to a profit making outfit.

 

The question is: why the sudden change in policy after 25 years of operating it as a non-profit entity?

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I am just learning about the New Jersey Supplemental Annuity Collective Trust (SACT). I am a public school teacher with access to high-fee 403(b) and 457(b) products. I have a Roth IRA and want to start funding a 403(b) or 457(b).

 

From everything I have read on the state Website, the SACT seems like a well-run, actively-managed fund with all of the administrative costs paid by the state. I am wondering why I have never heard teachers or administrators discuss this fund. Is it possible that very few public workers, other than those directly employed by state government, know about the trust?

 

Some thoughts I have...

 

Are there any drawbacks to investing in it? Other than the fact that an investor can't control the asset allocation, and that it might underperform the S & P 500 in the future, a drawback of any actively-managed equity investment, it seems like a good deal to me. I would like to hear people's thoughts. If there any teachers who invest in it, I would like to hear about your experience.

 

Jeff

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Guest Sierra

I am just learning about the New Jersey Supplemental Annuity Collective Trust (SACT). I am a public school teacher with access to high-fee 403(b) and 457(b) products. I have a Roth IRA and want to start funding a 403(b) or 457(b).

 

From everything I have read on the state Website, the SACT seems like a well-run, actively-managed fund with all of the administrative costs paid by the state. I am wondering why I have never heard teachers or administrators discuss this fund. Is it possible that very few public workers, other than those directly employed by state government, know about the trust?

 

Some thoughts I have...

 

Are there any drawbacks to investing in it? Other than the fact that an investor can't control the asset allocation, and that it might underperform the S & P 500 in the future, a drawback of any actively-managed equity investment, it seems like a good deal to me. I would like to hear people's thoughts. If there any teachers who invest in it, I would like to hear about your experience.

 

Jeff

 

Jeff:

 

The SACT is a post-tax retirement savings plan for all employees, state and local. It is only a pre-tax 403(b) plan for school district employees. By pressing a couple of computer buttons it could also be used for pre-tax 457(b) investing for all employees, state and local.

 

Having said that, we have SOME homework assignment: to change a local backwater retirement planning tool (SACT) which comes with zero costs to the employee to the best Defined Contribution plan in the nation. How many fund raising calls have you made so far? Have you received positive feedbacks?

 

Joel

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Joel,

 

I get your point that changing the SACT would be a challenge to do from a grassroots level.

 

It seems equity investing without cost to the investor is a good idea, and I saw on the state Website that in recent years, the funds performance has been close to the S&P 500. Do you think more people don't invest in it because there is only one investment option, or because they don't know about it? As of June 30, 2005, the trust had about 4000 active participants, and I think there are roughly 100,000 public school teachers in New Jersey.

 

 

Jeff

 

 

Jeff:

 

The SACT is a post-tax retirement savings plan for all employees, state and local. It is only a pre-tax 403(b) plan for school district employees. By pressing a couple of computer buttons it could also be used for pre-tax 457(b) investing for all employees, state and local.

 

Having said that, we have SOME homework assignment: to change a local backwater retirement planning tool (SACT) which comes with zero costs to the employee to the best Defined Contribution plan in the nation. How many fund raising calls have you made so far? Have you received positive feedbacks?

 

Joel

 

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