Delaware treasurer urges legislators to renew state employee retirement match

As part of a continued focus on her three main priorities – bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence – Treasurer Colleen Davis has joined with Sen. Trey Paradee, D-Dover, and Rep. Bill Bush, D-Wyoming, to reintroduce bipartisan legislation designed to help Delaware state employees save for retirement.

The bill, supported as a key strategic objective of the Delaware Plans Management Board, would reinstate the employer match for state employee contributions to its deferred compensation program, DEFER. The state suspended the match in July 2008 during the early part of the great recession. DEFER is a voluntary retirement savings plan designed to help state employees build long-term financial security. Employees can contribute pre-tax or Roth (after-tax) dollars to certain retirement savings accounts that offer a range of investment options to suit individual retirement goals.

“It has always been the intent of the General Assembly to revive the match after lawmakers reluctantly put it on hold in order to cut costs, and we are now in the right financial position to bring the match back,” Davis said. “In fact, every budget bill since Fiscal Year 2008 has contained language reading, ‘It is the intent of the General Assembly that this program be reinstated when funding becomes available.’”

Sponsored by Paradee and Bush, Senate Bill 20 aims to restore the state’s match and adjust it for cost-of-living increases by setting the maximum match at $20 per pay period. The previous maximum was set at $10 in 2000.

“State employees play an essential role in keeping our state running smoothly and providing the critical services that our constituents rely on,” said Paradee. “Having a match for the state employee retirement plan would help us attract and retain quality employees. Over the past four budget cycles, our focus has been on increasing employee pay, and shoring up the pension plan and the health insurance plan. This bill helps the State of Delaware remain competitive with other employers, and I look forward to working with my colleagues to get this over the finish line this session.”

During the years that the state offered the match, employee participation in the deferred compensation program grew by more than 3% each year. But following suspension of the match, employee participation steadily declined and has never recovered.

"With the rising cost of living and the ongoing need to pay off student loans, most public educators have very little left over for retirement," said Stephanie Ingram, president of the Delaware State Education Association, which represents nearly 14,000 public school educators throughout the First State. "I'm grateful that our lawmakers are fighting for our future by fulfilling Delaware's 17-year-old promise to its workers and finally restoring the state match on retirement savings accounts."

The bill includes a specific provision for state employees with student loan debt who are struggling to save for retirement. It authorizes the state to contribute to the retirement accounts of employees who are unable to afford contributions because they are making payments on student loans. 

“We as legislators came to Dover to get things done for our constituents. Not just for our districts, but for all Delawareans, which includes state employees,” Bush said. “With bringing back the match, we’ll be doing just that. As it stands, only 37% of our state employees feel prepared for retirement, and I feel strongly that this bill would increase that number significantly. Delaware’s state employees give so much to our state, and it's only right that we get this match done for them.”

For more information on Delaware DEFER, go to treasurer.delaware.gov/deferred-compensation-plans.