Jeff Kempker, CEBS, CRC
It’s always nice to be thanked for a job well done. Everyone needs an “atta boy” once in awhile. And the team at LAGERS is no exception. We love when our members send appreciation our way for protecting their retirement money.
LAGERS recently surveyed our members about their perceptions of LAGERS and some of the comments are very flattering, I must admit. Things like, “Thank you for providing such a great benefit!” and “Because of LAGERS I am enjoying my retirement!” We are always incredibly satisfied to hear that our members are either enjoying or looking forward to the financial security a lifetime monthly payment from LAGERS can provide.
The praise is wonderful, and we do work very hard to make sure your money is safe. But what we don’t hear enough of is thankfulness to the organization that is sponsoring your LAGERS benefits – your employer.
After all, your employer did not have to join LAGERS. There are other options for retirement plans that your employer could have chosen over LAGERS’ defined benefit structure. Plans that place your future retirement security solely on your shoulders. In these plans, you alone are responsible for funding the plan, choosing the investments, and taking on all the risk. In LAGERS, however, your employer is taking on the investment risk for you. That’s right. The markets tank, your LAGERS benefit remains the same. Your employer is also taking on the longevity risk for you. Meaning, you cannot outlive your LAGERS benefit. It just keeps coming, every month, until you pass away.
Your LAGERS benefit is paid for with sources: Your contributions, your employer’s contributions, and the returns that LAGERS can generate by investing those contributions. Many of you reading this don’t contribute to because your employer has chosen to pick up your contributions for you. While the investment returns pay for the majority of your benefit, your employer picks up a large chunk of the cost (at least 30%).
So the next time you are dreaming of retirement and thinking about how nice that monthly payment from LAGERS is going to be, be grateful to your employer for choosing to provide a defined benefit pension plan.
