The board selected the company, TIAA–CREF to manage the 401A accounts.
Of the three companies that responded to the request for proposal, this company offered the lowest administrative costs and the most experience in managing accounts for higher education employees, TJC spokesman Fred Peters wrote in an email.
Starting in January, the college will submit 2 percent of the full-time employee's salary into a retirement account.
This portion will not be deducted from the employee's salary, but awarded in addition to it.
Employees have the option of requesting an additional 2 percent be deducted from each payroll and invested into the account. The college will match the deduction up to 2 percent.
So an employee can have up to 6 percent of their salary put in their account.
“What we think we have with this new program is something that's better for employees, better for the college than Social Security,” TJC President Dr. Mike Metke said. “And, we think that it will make people want to stay here for their whole career.”
Sarah Van Cleef, the college's vice president for business affairs and chief financial officer, said college administrators had considered Social Security or alternatives for several years.
She said it would cost the college more than $3 million to get back into Social Security, something officials decided was not a good option.
Ms. Van Cleef said the college will spend this amount only if all 600-plus full-time employees take advantage of the full 6 percent investment in the retirement plan. Otherwise, it will be less.
For the 2013-14 fiscal year, the benefit will increase with the college automatically investing 4 percent of every full-time employee's salary into their individual retirement fund. This will be in addition to their salary and not deducted from it.
On top of that, each employee can choose to deduct up to 2 percent from each payroll and the college will match that.
So employees could have up to 8 percent of their salary invested.
If all full-time employees choose the full 8 percent investment it would cost the college $1.5 million for a full fiscal year, Peters wrote in the email.
Peters said the lowest full-time salary used to determine the amount invested will be $20,000.
So the full-time employees who make less than that — and he said there are a few positions that do — will be bumped up to that amount for the purposes of determining their investment.
DeVonne Cagle, TJC's manager of benefits and compensation, said Wednesday that this plan will be better for employees.
“It's a way to help employees prepare for their future, especially because we don't have Social Security as a safety net …,” she said.
She said the college previously had Social Security for employees, but opted out in 1976.
The college had a supplement to the other retirement plans for a while but stopped that and rolled those funds into salaries, she said.
TJC's full-time employees are in either the state's Teacher Retirement System or the Optional Retirement Program, the latter of which is only for faculty and certain administrative staff.