Program History
Act 1987-81 assigned to the State Employees’ Retirement Board (Board) the responsibility to establish and monitor a Deferred Compensation Program (Program) for Commonwealth officers and employees, through which participants may voluntarily build retirement savings by deferring a portion of salary to selected investment options. The Program is established as a trust, and is administered in accordance with Internal Revenue Code Section 457(b). Through the Request for Proposal process, the Board selected Great-West Retirement Services as Third Party Administrator (TPA) of the Program. The duties of the TPA are to maintain individual participant records, market the Program to participants, and counsel the members about the Program’s benefits. The core investment options are selected by the Board, and are independent of the TPA’s functions.
Growth of the Program
Over the past five years, the Program’s assets have increased in value from $1.8 billion to approximately $2.2 billion. The sharp drop in assets from $1.8 billion in 2007 to $1.5 billion in 2008 can be attributed to the downturn in the financial markets as participation in the program remained steady. As of December 31, 2011, there were 32,101 active and 18,237 inactive participants in the Program. The amount of annual participant deferrals over the past five years has ranged from $122 million to $160 million. In 2007, deferrals were $160 million which was attributed to the large number of participant retirements that utilized the Program’s special catch-up feature. Benefit payments to participants increased over that same time span, from $48 million in 2007, to $60 million in 2011. The chart below depicts the Program’s asset and participation levels over the past five years.
Program Highlights
The TPA provides participant assistance via individual and/or group counseling sessions with the eligible employee, at the employees’ work site. The TPA has established a local walk-in office in the Harrisburg downtown area. A toll free telephone service with counselors is also available to offer personal assistance. A telephone Voice Response Unit can be accessed at anytime to allow the participant to check on their account balance, transfer funds among different investment options or inquire about other Program features. The participants may also access the Program’s website at
www.sers457.com to view their most recent investment position, to make future allocation changes, to transfer among investment options and to update beneficiary information. Educational videos on financial, investment and retirement planning are also available to help participants in their investment and retirement decisions. In January 2009, the Program began to offer managed accounts to its participants. Managed accounts are personalized investment portfolios put together from among the plan’s investment options for participants who want a professional to do the investing for them.
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Deferred Compensation Program Account Performance
as of December 31, 2011 (Unaudited)
(Return of $1 invested the first day of the period)
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Fund Name
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Inception Date
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1 Year
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5 Years
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Since
Inception
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Stable Value
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07-01-1995
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3.73%
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4.57%
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5.30%
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Short-Term Money Market
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10-01-1988
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Aggregate Bond Index
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11-08-2010
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7.65%
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60/40 Balanced
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05-22-2006
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5.36%
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3.14%
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4.60%
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Stock Index
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10-01-1988
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2.23%
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-0.08%
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8.80%
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Extended Market |
03-01-1994
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8.80%
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EAFE Equity Index |
03-01-1994
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Aggressive Profile Option
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10-01-2003
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Moderate Profile Option
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10-01-2003
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Conservative Profile Option |
10-01-2003
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Program Performance
Program performance figures above are historical and reflect investment of all dividends and capital gains distributions and changes in net asset value. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Past performance cannot guarantee comparable future results. An investment in the Program is not insured or guaranteed by the United States Government and is not an obligation of, or insured by, any bank or the FDIC and is subject to risk disclosed in the Program brochure, including possible loss of principal. For additional information on the above-mentioned Funds, including information on charges and expenses, contact your Great-West Account Executive at 1-866-SERS457. The program literature contains more complete information including charges and expenses. Read the information carefully before joining the Program. Complete program literature and investment returns can be found on the website at www.sers457.com. For specific Program requirements and definitions, please see the Plan Document.
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