The History Behind the Union's Push for Supplemental Retirement Accounts at the SEC
Today, the SEC finally announced that, pursuant to its contractual agreements with the Union, it is creating new accounts to provide an additional 3% supplemental retirement match to all employees at the SEC. Many newer SEC employees are not aware of the fact that the Union had to fight for over a decade to establish these supplemental retirement accounts, which have long been enjoyed by federal employees at other financial regulatory agencies. Today is a good day to review the history of this program at the SEC.
Thirteen years ago, in 2002, the National Treasury Employees Union’s Legislative Department successfully shepherded through Congress “Pay Parity” legislation for the SEC, which was contained within the Investor and Capital Markets Fee Relief Act enacted that year. This Pay Parity legislation was specifically intended to improve the agency’s recruitment and retention by authorizing the SEC to provide pay and benefits to SEC employees that are comparable to those enjoyed by other financial regulatory agencies. It was as a result of that legislation that SEC employees were moved in 2002 from the old General Schedule to the current SK pay schedule, with substantially higher salaries.
The Pay Parity legislation also provided that SEC employees should receive similar benefits to those enjoyed by employees at other financial regulatory agencies. At these other agencies, including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, employees already enjoyed an additional retirement match. For that reason, throughout the 2000s, the Union repeatedly requested that the SEC provide a supplemental retirement match of 2%. This modest proposal would have been the smallest additional match among the FIRREAs. Nevertheless, SEC management refused to provide it. That dispute ultimately ended up at the Federal Service Impasses Panel (FSIP) and, in 2006, the FSIP imposed a compensation agreement upon the SEC which included the 2% retirement match.
After that FSIP Order, SEC senior management repeatedly promised to provide the 2% match to frontline staff over a period spanning seven years, but each year it broke that promise. The SEC claimed that it was unable to implement the match within the Thrift Savings Plan. Then agency management also refused to implement the match in a supplement 401(k) program similar to the FDIC’s and the OCC’s program, citing supposed “ethical concerns” with SEC employees investing funds in a plan that was managed by an entity that the SEC regulated. The Union pointed out that SEC employees already participated in the TSP, which was then run by Barclay’s, an entity regulated by the SEC, as well as in IRA accounts managed by a host of other entities regulated by the SEC. We also provided alternative arrangements that would not involve an SEC-regulated entity at all. SEC management was not moved.
Finally, in 2010, the Union was able to persuade Chairman Schapiro to abandon the pretense that it would be illegal to provide this important supplemental retirement benefit to SEC employees. Schapiro entered into an agreement with the Union to provide the 2% match to SEC employees, provided that the agency had sufficient funds to fund this benefit.
However, management then took the position from 2010 to 2013 that it did not have sufficient money to fund this 2% match. In January of 2013, as part of the compensation agreement covering FY 2013, the SEC finally agreed to fund half of the 2% match it had previously promised to provide, by providing a 1% supplemental retirement match. This agreement was supposed to be implemented in June of 2013, retroactive to January of 2013. The SEC, however, then breached this contract and refused to implement the program. The Union was forced to file a national grievance against the SEC for breach of this agreement in late 2013.
During negotiations with the Union in 2013 over a new, comprehensive, multi-year compensation agreement, the SEC repeatedly took the position that it would only provide a 1% supplemental match to frontline staff, to be funded after execution of the new compensation agreement. The agency took this position despite the facts that: (i) FSIP had ordered the SEC, in 2006, to provide a 2% match; (ii) the SEC had agreed in the 2010 MOU to provide 2%; (iii) the SEC had agreed in 2013 to provide 1%; and (iv) the SEC had failed to keep its promises on this issue for years.
The SEC continued to assert that it could not afford this benefit for you until, in the fall of 2013, senior SEC management announced that it would provide a new 3% supplemental retirement match, but only for the managers themselves. Management explained to the Union at that time that it was doing this because “managers work very hard” and “their morale was very low.” The Union was incredulous that management seemed to be able to find the funding to give itself the 3% supplemental retirement benefit, when it was continuing to fail to provide any benefit at all to the frontline staff, even after promising to do so for years. The Union pointed out that supplemental retirement matches provided by other federal financial regulators were being made available to all employees at those agencies, and that no other federal financial regulator provided a larger match to managers than to frontline staff. Indeed, this decision angered many frontline employees at the agency, given management's tireless efforts over the preceding years to block the Union from obtaining this important benefit for all SEC employees. The Union vowed that it would accept no global compensation agreement with SEC management that did not contain the full 3% supplemental retirement match for all SEC employees, and that it would take the matter to the FSIP if necessary.
Finally, in August 2014, SEC management relented and signed a new compensation agreement with the Union that increased the supplemental retirement match from 1% to 3% with implementation retroactive to October 5, 2014. With its announcement today in SEC Today, SEC management is finally setting up the supplemental retirement accounts. Currently, the SEC owes its eligible employees a retroactive retirement match of 1% for the period from January 2013 to October 4, 2014, as well as a 3% supplemental retirement match going forward from October 5, 2014 until the date on which the new accounts are opened next month. The SEC has agreed to pay these retroactive amounts. Eligible employees (who have contributed enough to the TSP to receive the extra match) will be receiving a personalized notification very soon from OHR, setting forth the calculation of their retroactive benefits. At a later point in the future, employees will be able to periodically sweep their savings into the TSP or an IRA of their choice.
Please note, however, that management still plans to fund the 3% benefit for managers only retroactive back to January 2014, while the frontline staff will receive this benefit retroactive to October 2014. Management has provided the Union no good explanation for this differential treatment. We continue to strongly disagree with the notion of differentiated retirement benefits between management and the frontline staff.
"We are extremely pleased that we were finally able to land this important benefit for SEC employees," said NTEU Chapter 293 President Greg Gilman this afternoon. "It is unfortunate that we have had to fight for so hard and for so long to bring you a benefit that other federal financial regulators have enjoyed for years," he continued. "We sincerely hope that in the upcoming negotiations on work life benefits and compensation between the SEC and the Union during the coming year, we will not continue to face this type of highly competitive, nonproductive approach to labor relations that has been the hallmark of OHR and OGC at the SEC over the past several years. Frankly, we view that type of human capital approach to be anti-frontline employee -- and we hope that we will be able to change this dynamic and partner with senior management to create a better future for SEC employees and the American public they serve."
When the accounts are put in place, the union will ensure that employees receive all the retroactive sums to which they are entitled due to OHR's delays. To ensure that you receive the full supplemental match, you must be sure that your current contribution to the TSP is at least 8% of your salary for 2015 if you are a FERS employee, or 3% of your salary if you are CSRS employee. If you are already contributing 8% or more (FERS) or 3% or more (CSRS), it is not necessary for you to do anything further to receive the supplemental match.
- See more at: http://secunion.org/news/RetirementMatch1062014#sthash.vHxMwl4X.dpuf