Puerto Rico government officials announced the start of the first phase of implementation and management of the new defined contribution plan for public employees, including teachers and judiciary system workers.
During a roundtable with members of the media, Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF, for its initials in Spanish) Executive Director Omar J. Marrero and Puerto Rico Retirement Board Executive Director Luis M. Collazo explained that beginning Dec. 19, public employees will be the ones deciding how they wish to invest their money.
The plan compares to the 401(K) programs offered to private-sector employees, Collazo said.
Participating employees will have to make a mandatory contribution of a least 8.5% of their monthly salary and may increase the amount to up to 20% of their salary, or $15,000 a year. Employees 50 and older are eligible to make an additional “catch-up” contribution of up to $1,500 a year, according to information provided by the agencies.
As part of the process, the government has set up a website that will be developed in two phases.
As part of the first phase, employees will be able to access their account, choose investment funds and designate beneficiaries, among other transactions. In addition, the new site will feature tools and educational materials that will help employees get acquainted with the new plan and obtain the knowledge necessary to invest in accordance with their interests and needs.
During the second phase, public employees will be able see their accrued balances in the new platform and increase their contribution rate.
Collazo said participants will be mailed a letter with the information needed to register in the new platform, such as a temporary password and the personal identification number.
The new Law 106 Retirement Plan is independent of previous retirement systems pension plans and will be managed by Alight Solutions Caribe Inc. Alight will oversee the plan for more than 100,000 active retirement systems participants.
“These changes, which are an important step toward transforming our retirement system, and a promise fulfilled, are part of the public policy of this administration that seeks to empower public employees with new technological platforms that allow them to take control of their future,” Marrero said.
“AAFAF will continue providing technical support and supervision as fiscal agency and financial advisor of the Retirement Board to guarantee and safeguard the future of our government employees,” he said.
Employees will be able to view basic information about the different investment alternatives and the details of each fund on the plan106info.com webpage and on their mobile app. In addition, a 24/7 financial learning center will be available to address doubts and explain the basic concepts needed to organize financial goals in the most convenient order for the employee, Collazo said.
Alight Solutions Caribe Inc. is currently training retirement affairs coordinators at some 200 agencies, municipalities and public corporations, he said.
Public employee money will be “segregated and protected” in the new Law 106 Retirement Plan.
“Public employees, not the government, will now be the ones deciding how and where they invest the money withheld every month from their wages for their retirement. In addition, public servants will have daily access to their statements of account and to the performance of their investments,” Collazo said.