In their last meeting of 2015, Kennesaw City Council voted unanimously to move forward with a change in the vesting periods for pensions provided to election officials and employees. The change was suggested by elected officials who felt the current vesting policies were unfair to employees in the city.
Currently, elected officials are vested in the pension plan immediately upon election while city employees are not vested until they have worked ten years in the city. The new policy would make elected officials vested after four years, which would be the start of their second term in office, and city employees vested after five years. A plan to eliminate retirement pensions and health benefits for elected officials was vetoed by Mayor Mark Matthews in September. Mayor Matthews supports the new changes to the retirement plan.
What is Vesting?
Vesting is a process that allows a pension participant non-forfeitable rights over employer-provided stock incentives or employer contributions made to a qualified retirement plan or pension. Experts say that allowing an employee to become vested provides an incentive for them to perform well in their position and encourages them to remain with the company. Vesting only pertains to the amount of funds placed in a retirement account by an employer and not to the amounts placed by the employee on their own. Often, these are called “matching” funds, where an employer will match the amount an employee places in their retirement or pension fund, normally up to a certain percentage. In the case of Kennesaw, elected officials may now have access to the city-funded portion of the pension after four years and employees may have access after five years.
Retirement planning requires an understanding of how pension plans operate. It is highly recommended that people begin their retirement planning long before the age they are ready to retire. Most pensions have years of service or age requirements regarding when someone can retire. Experts say that retirement planning should begin in your 20s, or as soon as you begin earning a steady paycheck. This is because the sooner you begin saving, the more chance your money has to grow. For example, if you begin saving $3,000 per year, which breaks down to $250 per month, placing your savings in a tax-deferred retirement account and then stop saving at age 35, even though you didn’t put any additional funds in the account, your initial $30,000 investment could grow to almost $500,000 by age 65, which is the average retirement age. If you wait until you are 35 to begin saving $3,000 per year for the next 30 years, your total investment will be $90,000, but your return on investment could be less than $400,000.
At Waggoner Insurance, we understand how important it is to plan in life, whether it is planning for retirement or to providing protection for your family should tragedy occur. We can help you with your life, health, auto and home insurance needs because we understand that insurance and retirement planning often go hand-in-hand. Call us today or visit us online to learn how we can help you in planning for your future.
Marietta Daily Journal