By Brandi Makuski
STEVENS POINT – Seasonal employees and crossing guards in Stevens Point may soon see more value in their retirement accounts.
The city’s Personnel Committee on Monday will review a proposed contract that would boost the interest rate for participants in the FICA Alternative Retirement Program. That plan, in place since 2016, takes the place of Social Security for those short-term employees.
FICA, the Federal Insurance Contributions Act, is a U.S. federal payroll tax deducted from each paycheck.
Instead of paying the 6.2 percent federal payroll tax, workers have 7.5 percent of their wages set aside, before taxes, into an account in their own name. Comptroller-Treasurer Corey Ladick said the program makes sense because Social Security benefits are based on a worker’s 35 highest-earning years. A few seasons with the city won’t raise that benefit, but a retirement account with real money in it will.
At the moment, those accounts earn only 1 percent interest. The city’s vendor, Life Insurance Company of the Southwest, has offered to raise the rate to 3.25 percent. The new rate could fluctuate, but won’t drop below 1 percent, according to city records.
If the proposal is approved, new contributions would go into the higher-yield contract. Employees would still be able to withdraw their money once they leave city employment, but the city would have to keep the plan with the same vendor for at least seven years.
The committee is expected to discuss and possibly act on the change at its Sept. 8 meeting, scheduled for 6:05 p.m. in the Community Room at 933 Michigan Ave. The meeting is open to the public.