NTSA Works Against Teachers Best Financial Interests

March 7, 2023

I recently detailed how the National Tax-Deferred Savings Association uses almost comically flawed research and white papers to argue why K-12 403(b) plans should remain multi-vendor. See NTSA and the Big Lie. See also: NTSA and the Swimming Pool Dilemma. Let's look at three concrete ways they lead the charge to keep the K-12 403(b) in the Dark Ages. 

1. Certified Retirement "Specialist" Program (CRES)

A better name for this "certificate" would be CRAP. It's almost like the idiom "Wolf in Sheep's Clothing" was created for this bait-and-switch sales tool masquerading as education. 

The NTSA declares: "Even teachers need to be taught the basics of planning for retirement. In an effort to improve their retirement readiness, the National Tax-Deferred Savings Association (NTSA) has launched an educational program for school districts and their employees across the U.S. The program was created to address the low participation rates in 403(b) plans, which average 27% nationally."

Why is participation so low? One reason is that the NTSA fights single vendor plans (see below) and auto enrollment (see below). Two simple steps that would greatly improve participation and retirement outcomes for educators. 

It gets worse: "The NTSA Certified Retirement Education Specialist (CRES) advisor is qualified and available to teach the Retirement Education program to the employees of your school district. The CRES has completed a certificate program through the American Retirement Association (ARA) Retirement Plan Academy, addressing the important retirement planning considerations of public employees. The NTSA CRES advisor has agreed to abide by the highest standards of professional conduct and to coordinate all educational activity in accordance with school district solicitation policies and guidelines."

Who owns the NTSA? The American Retirement Association. Highest standards you say? Surely then you must be a fiduciary to earn this certificate? Nope. You don't even have to be an advisor. 

It gets worse. Surprise, surprise education is not the key goal. It's: 1) gaining access to schools, i.e. potential clients (see slide 4, bullet point 2); and spreading NTSA brand awareness with plan sponsors and policymakers (see slide 4, bullet point 6).

2. Working to Ban Single Vendor 457(b) Plans in Illinois

In legislation eerily similar to recent New Jersey proposal (see New Jersey's Bad 403(b) Bill), the NTSA is backing a bill to require Illinois school districts with at least 1,000 students (identical number to New Jersey bill) to have at least four vendors (also identical to New Jersey bill). Why would they do this? So many rea$ons. Note: Reportedly the bill has been amended to require more than one vendor. It's still an assualt on a school district's ability to go single vendor. 

We may be called 403bwise but thanks to recent rule changes we now believe the 457(b) is a superior to the 403(b). In fact, we believe most school districts would be better served by dumping the 403(b) and going to a single 457(b) provider. Why? Superior plan (see 457(b): Savings Plan Unicorn? and podcasts below), economies of scale, and simplicity. When contributions are directed to a single vendor, the employer can negotiate better investment pricing. Furthermore, numerous fantastic state-based 457(b) plans allow teachers to contribute. Many of these plans (New York and Ohio) sport rock bottom investment costs. The reason? Assets under management. Most government employees are eligible to contribute to a state-run 457(b) plan so the assets under management can be large which allows the entity to negotiate fantastic pricing. 

IIllinois recently created a state-based 457(b) plan available to teachers. I'm sure the timing of the NTSA-supported legislation is a pure coincidence. 

If having four vendors (or more than one) is so good for employees, why does it only apply to K-12 educators? See title of this blog post. 

3. Fighting Auto Enroll in Maryland

An organization that creates a certificate to "address the low participation rates in 403(b) plans, which average 27% nationally" would never fight a provision — auto enrollment — that would bring 403(b) participation closer to 100%, right? Sigh. They argue that between pension and Social Security contributions, educators in Maryland may be saving too much! The bill provides an opt out. 

New NTSA Certificate

I have an idea for a new NTSA certificate. It's called CGSP. It's stands for the Certified Gaslighting Specialist Program. 

 

Stay wise and well (and fight NTSA Gaslighting)

View all blog entries