Proposed changes to state employee investment plan withdrawn
Proposed changes to the deferred compensation plan for state workers are being withdrawn after complaints were raised about them from lawmakers and employees.
However, the Illinois Board of Investments, which suggested the changes, will try again to implement them early next year.
“We will redraft the rules. My personal hope is to do that shortly after the first of the year,” said investment board executive director William Atwood.
This time around, though, Atwood said he will “aggressively talk” to lawmakers and others to ensure they understand what he is trying to do.
Atwood does not think the changes he is proposing are controversial, and that they will end up saving money for participants in the plan. Atwood blamed a climate of distrust in Springfield for people being suspicious of what he wants to do.
Rep. Raymond Poe, R-Springfield, a key opponent of the changes, said he still needs to be convinced they are for the good.
“I’ll have to wait and see what the new rules are,” Poe said. “I think right now what we want is stability.”
The deferred compensation plan is the state’s version of a 401(k). Employees can elect to have pre-tax deductions from their paychecks, which they can then direct to their choice of 15 mutual funds. The funds are selected by the Board of Investment, which also is responsible for investing pension money for state employees, judges and lawmakers.
The Department of Central Management Services administers the plan. The Board of Investment recommended that some of those administrative duties be taken away from CMS and handed over to an outside administrator.
Atwood said the administrator would be mutual fund giant T. Rowe Price, which has been the deferred compensation plan’s administrator for the last 25 years. The investment board determined the switch could save participants $20 a year in administrative costs.
Poe, though, fears the administrative duties could land in the hands of a politically connected firm.
Poe also raised concerns about a proposal to change “investment funds” to “investment options” in written documents about the plan. He said that could lead to changes in the types of investments workers can make. Atwood said the planned change merely reflects language used in the industry and would not affect investment options offered to employees.
Atwood said the new set of rules he’ll submit next year also will codify some of the procedures already used by the board, including the process to select investment options offered to employees.
Anything recommended by Atwood will have to be approved by the Joint Committee on Administrative Rules, a bipartisan panel of lawmakers.
Doug Finke can be reached at (217) 788-1527.