All but three counties in Alabama participate in the Employees Retirement System of Alabama (ERSA.) The ERSA program is what is commonly referred to as a "defined benefit program"--a predetermined amount is paid into the program for prescribed lengths of time and predetermined benefits are eventually paid. The ERSA is one of the best public retirement programs in the country and public employees in Alabama are fortunate to have it available to them.

There are, however, other formal programs available through which public and private employees can set aside current income for retirement purposes. In 1978 the United States Congress enacted Section 457 of the Internal Revenue Code. This section authorizes what is commonly referred to as "457 deferred compensations plans" for public employees. It is similar to 401k retirement plans for employees in the private sectors. Such retirement programs are generally referred to as "defined contribution plans." Under these plans the employee periodically sets aside as much money as he or she desires, up to a statutorily prescribed amount, and when retirement age is reached, the accumulated contribution, plus interest earnings, is available to be drawn upon by the individual. There are numerous taxation rules and regulations that apply to such plans.

In the early 1980s, the National Association of Counties (NACo) entered into an agreement with Public Employees Benefit Services Corporation (PEBSCo), now known as Nationwide Retirement Solutions, to market Section 457 deferred compensation plans on a national basis. Each state association of counties was invited to endorse the program and assist with the marketing efforts. The Board of Directors of the Association of County Commissions of Alabama endorsed the program in 1991 and entered into a contract with NACo to help promote it in the state of Alabama.

As of July 30, 2000, 56 counties in Alabama allow their employees to participate in the deferred compensation program. As of that date, there was more than $60 million in assets (deferrals) in the Alabama program. Assets being held on behalf of particular counties in the state range from more than $30 million to less than $10,000.00. Many counties have several hundred thousand dollars held on behalf of their employees.

The deferred compensation program provides an excellent means through which county employees can set aside additional sums of money for their retirement years. All county commissions are urged to make the program available to their county employees. It is strictly voluntary and involves very little time on the part of the county.

Information about the deferred compensation program can be obtained by contacting Nationwide Retirement Solutions in Montgomery at 334-277-7820.