TRS Supplemental Savings Plan November Update
Last week TRS published Employer Bulletin 22-15 on its Supplemental Savings Plan (SSP), a new SSP Employer Participation Agreement, and a form of resolution for adoption by school boards to approve the Participation Agreement. The Participation Agreement binds the school district to the 457(b) Deferred Compensation Supplemental Savings Plan document (the Plan Document) which appears to be unchanged from the October 30, 2020 amended version distributed to school districts by TRS in February of 2021.
The requirement for a state-wide SSP became law in 2018, with TRS’s initial implementation efforts announced in February of this year. At that time, considerable concerns and objections were raised by school business officials and other administrators which, together with technical problems on TRS’s end, further delayed implementation. Even now, TRS has not set a deadline by which the Participation Agreement must be adopted. However, March 1, 2022 is the first effective date for employee contributions as long as the Participation Agreement has been approved and processed by that date.
The new documents from TRS follow an amendment to the Pension Code which became law in August of this year requiring school districts to “comply with the reporting and administrative functions established by” TRS for the SSP and “to implement the benefits established” by the law. The amendment also exempted the SSP from the State Mandates Act which otherwise would likely have permitted school districts to decline to participate in the SSP if the cost of participation were not funded. The amendment may have been part of an effort to block the considerable concerns expressed by school districts when the SSP was first announced in February.
Unfortunately, none of the problems in the Plan Document were addressed regarding liability protection, fiduciary duties, expenses of administration and reporting, unfettered TRS rights to amend the Plan Document and monitoring of contribution limits. We proposed Plan Document changes to TRS to mitigate these problems, but TRS declined to make any modifications. Instead, TRS apparently just reissued the Plan Document in the same form as presented last February. We are now seeking legislative support to address these problems. We are also identifying other options which will be best discussed on an individual client basis to permit fuller consideration of next steps and to preserve attorney client privilege.
It may be in the best interests of school districts to delay school board action on the SSP Employer Participation Agreement at least until January or February of 2022 and to continue to seek changes in the law and TRS requirements to address the problems which still exist.