Teachers aren’t known for their huge paychecks, but – as some financial services watchers will tell you – they’re excellent savers. There’s money to be had in teacher retirement accounts.

And that’s partly why new regulations for the 403(b), a tax-deferred annuity retirement savings plan for teachers and charity workers have set off a flurry of activity. Financial services and insurance companies such as ING and The Hartford are working with employers before new rules take effect in January 2009.

Federal rules will make the old 403(b) more closely resemble its younger cousin, the private-sector 401(k). The changes are likely to elbow smaller companies out of much of the market, while larger companies are moving to keep their current 403(b) business and scoop up a larger share, said Nadine Rosin, counsel with Hartford-based Pepe & Hazard, who deals with retirement savings issues.

“This is a major overhaul,” she said, noting that it’s been decades since the last major changes to the plan. “People have been scrambling to figure out what to do.”

Companies with 403(b) business say they’re working steadily to stay competitive as the new regulations change the game. TIAA-CREF and ING both announced recently that they have cre-ated legal plan documents to help employers shift to the new rules, and that they’re already working with school clients to make the transition.

Those plan documents on offer from ING play into the most important upcoming change for plan vendors: School administrators and other employers who provide 403(b) plans will have to shoulder more oversight of their employees’ finances.

Employers must provide plan documents that spell out the elements of the 403(b) plans they offer, and they also will have more oversight of where their employees invest and how they move their money around, Rosin said.

‘Skinny’ Numbers

Previously, teachers and other plan participants often could pick from dozens of investment plan vendors, and change their vendor easily and with no monitoring from employers, unlike 401(k) plans. Now that employers are going to have to keep closer track of 403(b) plans, they’re likely to simplify the process by cutting down the list of plan vendors on offer for their employees.

“It’s going to skinny down the number of carriers,” Rosin said.

That’s good news for financial services giants that already have a strong grip on many teachers’ investment dollars, say Rosin and other financial consultants.

Angie Kyle, vice president of pension product management for New York-based financial services company TIAA-CREF, says responding to the 403(b) regulations has been one of the com-pany’s top priorities this year.

Plan providers – such as school districts – have never dealt with these kinds of requirements before, she said.

“They’re finding their responsibility is rising at a rate they’re not ready for,” Kyle said, and that’s why companies like hers are working to anticipate employers’ needs. “2008 is the big planning and investment year for a lot of operators,” she said.

Smaller outfits, like Legend Group, are in a more vulnerable position, likely to get knocked off schools’ rosters as they consolidate to larger companies.

“It is definitely a fear, and that’s why we’re working so hard to educate our guys in the field,” said Jessica Kovachik, retirement plan specialist for the Florida-based organization. Legend’s agents are working to make contact with more potential clients and gain as much ground as possible in a bid to stay on schools’ lists.

Kovachik says the company realizes it doesn’t have a powerful multinational name, but touts its 403(b) experience and its depth and breadth of options for plan participants, and focuses on making contact to sell its wares.

Those personal contacts are a big factor in keeping business. Dan Otter, a former teacher who runs a blog on 403(b) investment options at www.403bwise, says insurance agents still often sell 403(b) products directly to individuals through meet-and-greet salesmanship.

Tom Foster, national spokesman for retirement plans group for The Hartford, said having a wide variety of plan choices is another asset for larger companies. With fewer plan vendors to choose from, plan participants will want to see that even through they have fewer companies to work with, they still have a large number of options.

And making the 403(b) more similar to the 401(k) makes it easier for companies in terms of personnel – staff members won’t have to deal with such wildly different systems.

With no changes in the 403(b) since the 1960s, the time was ripe for change, he said. “It had gone along its merry way and become pretty complacent.”