Is The Township's Retirement Package Too Rich?

In the Board's July 2012 Planning Session, questions were raised on whether the Township Two (2) for One (1), 7% match to its Retirement Plan (a 401K Defined Contribution Plan) was too "rich." This question has come up since then. It came up again at our February 21 Board Meeting.  In comparison to the private sector many might think this is the case. This view, on the surface, is reinforced if one looks at the Invesco 2011Survey- 58% of Small Plans support a 1 for 1 match of 6%; 38% support a 1 for 1 match of less than 6%.

However, I believe there are two things The Township Board had to consider in making any such judgement:

1) First, how do our employee benefits compare to the public sector ? -- 85% of our exempt employees are hired primarily from the public sector; 43% of our non-exempt employees come from this sector. Since 2009, the Township has routinely compared our employee salaries and benefits with a set of comparable "peer" public entities. We strive to stay somewhere in the middle and that is where we are today. We are neither the highest nor are we the lowest- we are in the middle.

2) Second, how does our total  compensation compare to the market, both public and private? It is well known, and it is well documented, that public sector salaries are about 12 % less than comparable positions in the private sector. Even when higher benefits are taken into account, local government compensation are still 6-8% below the private sector. Where comparable private sector information could be found in Houston , the Township did the comparison- salaries just by themselves were about 11.7% below the private sector.

Thus, I think the simple answer to this lingering question is:

1) We compensate our employees fairly-- somewhere around the median of where other public sector entities of our size and complexity compensate their employees

2) Our total compensation is not out of line with the private sector--it appears our salaries are lower than the private sector but our total compensation package, when all benefits are taken into account, are in line with private companies.

Based on this information and conclusion, the Township Board decided not to take any action on our retirement match, at least for 2013. The Township's outside consultants reviews our compensation and benefit package every year to make sure we pay our people competitively and are able to retain good people. I do not  see this changing.