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Relating to automatic employee participation in and administration
of a deferred compensation plan provided by certain hospital
No fiscal implication to the State is anticipated.
HB 2477 would standardize rules and regulations for automatic participation in deferred compensation plans for employees of hospital districts. Employees would be automatically enrolled in deferred compensation plans if the hospital district chooses to do so, with an opt-out option for employees. The hospital would be required to inform employees of their automatic enrollment and their option to opt out. There would be no requirement for employees to opt in to the program.
Employees would make a contribution of 3% of their compensation to a default investment product selected by the plan administrator, with the contribution made by automatic payroll deduction. The hospital district would be allowed to transfer an employee’s deferred amounts and investment income from a qualified investment product to the trust fund of the deferred compensation plan in which the employee participates, if the district determines that the transfer is in the best interest of the plan and the employee.
Texas Action recommends opposing HB 2477 because it infringes upon principles of personal responsibility and individual liberty. It should never be assumed that employees will want to participate and automatically enroll them. It should always be up to the employee actively opt in to these types of investment plans, and decide whether they wish to take advantage of the benefits provided by the plan.