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Deferred Compensation

Quarterly Reports

Link to PA Deferred Compensation Website

 

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 Financial as Third Party Administrator (TPA) of the Program. The duties of the TPA are to maintain individual participant records, market the Program to employees, 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 $1.5 billion to approximately $2.4 billion.  As of December 31, 2012, there were 31,665 active and 18,813 inactive participants in the Program. The amount of annual participant deferrals over the past five years has ranged from $122 million to $136 million. Benefit payments to participants increased over that same time span from $48 million in 2008 to $62 million in 2012. The chart below depicts the Program’s asset and participation levels over the past five years.

Deferred Compensation Program Five Year Activity Assets and Enrollment

Program Highlights
The TPA provides participant assistance via individual and/or group counseling sessions with the eligible employee, at the employee's work site. The TPA has 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 to view their most recent investment position, to make future allocation changes, to transfer among investment options, to change deferral amounts 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 Program’s investment options for participants who want a professional to do the investing for them. In 2012, the Program began accepting deferrals into designated Roth accounts, which have tax advantages that are different than traditional tax-deferred savings. Roth contributors pay federal income tax on their deferrals now; qualified distributions of principal and earnings will be tax-free in retirement. Participants may use a combination of before-tax and Roth salary deferrals to maximize their use of the Program’s benefits.
 

Deferred Compensation Program Account Performance
as of
September 30, 2013

(Return of $1 invested the first day of the period)

Investment Options

Inception Date

1 Year

5 Years

Since
Inception

Aggressive Portfolio Fund

10/2003

17.19%

9.39%

7.93%

Moderate Portfolio Fund

10/2003

12.19%

8.71%

7.30%

Conservative Portfolio Fund

10/2003

5.50%

6.22%

5.55%

EAFE Equity Index Fund

08/1998

24.11%

6.68%

4.71%

Extended Market Fund

08/1998

31.02%

13.57%

8.76%

Stock Index Fund

12/1994

19.36%

10.09%

9.27%

60/40 Balanced Fund
05/2006

10.51%

8.87%

6.47%

Aggregate Bond Index Fund
02/1995

-1.87%

5.25%

6.21%

Short Term Money Market Fund
10/1988

0.20%

0.41%

3.73%

Stable Value Fund
07/1995

2.99%

3.87%

5.10%

   
 

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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Last published: 03/17/2014 11:48 AM