The Nebraska Investment Council determines the investments for the State Employees Retirement System of the State of Nebraska and the Retirement System for Nebraska Counties,and the State Deferred Compensation Plan.
Cash Balance Benefit
Since January 2003, the accounts for all new employees who participate in the State and County Retirement System Plans are automatically invested in the Cash Balance Benefit. Members who participate in the Cash Balance Benefit do not make their own investment choices. The assets are held in a trust fund which is managed by the Nebraska Investment Council. Cash Balance Benefit participants are guaranteed an annual interest credit rate which is defined in statute as the greater of 5% or the federal mid-term rate plus 1.5%. The interest credit rate is adjusted each calendar quarter.
Prior to 2002, employees in the State and County Retirement System Plans were only offered the Defined Contribution. In December 2002 participants were given the option to remain in the Defined Contribution or transfer to the Cash Balance Benefit implemented in January 2003. Also, in 2007 and 2012, participants could elect to transfer to the Cash Balance Benefit.
Members who remain in the Defined Contribution make their own investment choices based on the funds offered. Contributions to these accounts come from both the employee and the employer. With the passage of LB 366, State employees are required to contribute 4.8% of their salary (beginning January 2007). The State matches the employee contribution at the rate of 156%. County employees are required to contribute 4.5% of their salary. The county matches the employee contribution at the rate of 150%. The account balance for both state and county employees consists of accumulated contributions plus investment gains or losses.
State Deferred Compensation Plan
The voluntary Deferred Compensation Plan for State employees offers the same investments as those offered in the State and County Retirement Systems’ Defined Contribution. Combining the investment of the State Deferred Compensation Plan and the much larger State and County Defined Contribution provides a major reduction in costs for participants making voluntary contributions.
Mass Mutual (Previously Hartford)
As of January 1, 1997, the investment management of the State Deferred Compensation Plan assets was changed from Hartford Life Insurance Company to the Nebraska Investment Council. Participants in the old Plan were allowed to remain with Hartford or they could choose to transfer their balances at any time to the current State Deferred Compensation Plan. Participants who remained with Hartford were not allowed to make new contributions to that Plan. Given the elimination of new cash flows to that Plan, the Council expects the investment options to lose assets over time.
As of January 2, 2013, Massachusetts Mutual Life Insurance Company has acquired the Hartford Retirement Plans Group. This acquisition did not cause any immediate changes to the plan.