Yes, your “retirement” fund will be all removed by fees

As I’ve mentioned before, instead of the Social Security tax that private-sector workers pay, government workers (at least those working for the Commonwealth of Massachusetts and its subdivisions) have an alternative 7.5% mandatory contribution to the “SMART Plan”. This is an actual account, kind of like a 401(k), where one actually has an account balance that slowly grows and one gets at retirement. (Those working full-time for the state have a more complex system, but I’m describing how it works for part-time workers, where it’s just a straight deduction and there are no choices on how it’s invested.)

Jessi was involved in this plan when she was substitute teaching, although we eventually managed to get the money out of it when she stopped working. (Which is a plus of this system over Social Security.)

For being Town Moderator of Charlton, I get a $150 stipend per year for my services. This is treated as me basically being a part-time employee of Charlton, and so my stipend is subject to this 7.5% mandatory contribution to the “retirement” plan.

This 7.5% of $150 works out to $11.25 per year. The administrator of the SMART Plan, Great-West Retirement Services, charges $18.48 per year to administrate the plan. Basically, each contribution will be eaten away by fees that go to Great West, and the balance of the “retirement” fund will always be zero at the end of the year.

My mom, who is on the Planning Board in town and has a slightly larger stipend, says that her balance ends up being about a dollar or two each year.

You’ve just got to love a government mandate that requires a portion of elected officials’ stipends go to administrative fees and that provides no actual useful value whatsoever.