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Idea to send: |
| Topic | State Savings Incentive |
| Content | Rather than implementing a pay raise to state employees, which the employees will pay both federal and state income tax on, it would appear to be more advantageous to the state employees for the State to provide a higher match rate for monies going to the state employee’s retirement SoonerSave accounts which would utilize pre-tax dollars from the employee, encourage savings, actually cost the State fewer tax dollars, allow the state employee more income when they retire, and allow them to pay the taxes on that income at a time when they are facing, most probably, a lower income bracket for taxation.
During the last across-the-board pay raise for state employees, the average employee received $1,500, which after taxes amounted to about $1,125 and cost the State a total of $64 million. If the State agreed to match the first $100 that the eligible employees put in their SoonerSave accounts each month, or $1,200 per year, this combined with the $100 deposit by each employee each month with pre-tax dollars would equal $2,400 per year for the employee without considering interest. If you added an 8% interest accumulation, the state employee would be adding a minimum of $2,592 to their retirement saving each year. This amount of savings, without considering compounding, would provide a total of $51,840 for the employee after 20 years. The annual cost of providing this match for the first $100 for all 37,600 eligible state employees would be a total of $45,120,000 or $19 million less than the 5% pay raise cost.
Considering the desire to improve conditions for State’s retirees and to save State tax dollars wherever possible, this would appear to be a win-win situation for both the state employees and the State. Thank you for considering this idea.
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