University Student Union, Inc. has offered its student employees the opportunity to participate in a retirement savings plan for four years now but with no interest among those employees, the USU board of directors voted down a measure that would require the university to match any deposits up to 6 percent.

In 2007, new laws required non-profit entities, such as public schools, to allow all employees working 20 hours or more per week to be eligible for participation in the 403b plan.  The plan excludes work-study students and those working less than 20 hours per week.

The 6 percent match is still only available to career employees who have been with the university for at least two years.  USU Human Resources Officer Kristen Pichler said students generally do not stay more than two years.

If that measure were approved, students who chose to allocate pre-taxed funds from their bi-weekly paychecks would have been given 6 percent of that deposit from the USU.  For example, if a student chose to deposit $30 from their paycheck into the retirement savings program, they would receive a little less than $2 from the USU into that savings account.

Joe Illuminate, associate director of finance and business services, said matching could cost the USU about $60,000 a year.

“It’s an extreme example,” he said during the March 21 board meeting.  “But if everyone participated, 6 percent of our $1 million student pay budget would cost us $60,000.”
Not everyone participates, however.  In fact, not one student employee has opted into the program since it became available to them.

During the board’s discussion to approve matching, University Representative Robert Barker said this plan is probably not attractive to students because they are not looking 50 years into the future.

Pichler echoed that same sentiment.

“It’s not surprising that they don’t participate,” she said in an interview.  “Students are not thinking about retirement, they just want to graduate.”

Pichler said smaller paychecks and more immediate financial demands may also play a role in students’ reluctance to put money away into a retirement plan.

“A couple students have expressed interest but they never apply for the program,” Pichler said.

“They don’t realize that the funds are deducted from their check, that they have to pay taxes upon withdrawal or that there is a 20 percent penalty for early withdrawal.”

CSUN’s USU has little over 100 employees, she said.  Students are paid about $8 to $10 per hour depending on their position and their hours are capped at 20 per week.

During the voting body’s meeting, Faculty Representative Sally Spencer spoke in favor of the program.

“This could help students gain perspective and save money for the future,” she said.

As with any retirement savings fund, participants are subject to various rules and penalties. Money may be removed from the account without penalty fees when the participant reaches

59.5 years of age, at which point the funds will be taxed, generally at a lower rate.

Should student employees choose to participate in the program, Pichler said those accounts would stay separate from savings funds they may acquire through future employers.