Retirement plan successes depend on the guidance and expertise of benefits decision-makers. But not every companys story is the same and not every 401(k) or even pension plan offering is guaranteed to resonate with all workers.
Earlier this year, at the National Association of Plan Advisors 2015 401(k) Summit, three retirement plan heads from three very different employers shared their stories on what works, whats been a total failure and what has emerged in helping employees get the most out of a company sponsored retirement program.
Success, it seems, depends on a mixture of guidance and communication from plan sponsors and a certain level of flexibility and engagement from a community of workers. Or so has been the case for Ellen Ford, president and CEO of the Rhode Island-based Peoples Credit Union, Mike Tanner of Utah-based employee rewards and recognition firm OC Tanner, and Deb Gualtieri, HR director for Music Choice a syndicated music service with offices on both coasts.
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In Gualtieris case, where her mostly young, lifestyle-oriented employees living in Los Angeles, New York and Philadelphia are more concerned about paying rent than saving for their retirement, getting participants on board for plan participation required the establishment of an extraordinary match as high as 10% - for staffers making less than $75,000 a year. She says the company has also had to work very hard to make sure they understood that benefit. We dealt with a lot of millenials, and we had to create an offer that they couldnt refuse. So far, thats gotten good results.
The poor financial juggling skills of that same demographic, Gualtieri admits, also caused her retirement plan the most trouble, before recent updates to remedy the issue.
Our old plan allowed for participants to take up to three loans from their savings, which our broker told us was a bad idea, and it unfortunately enabled people to have even more financial issues, she says. We had a core group who were making payments on all three loans at the same time, all the time.
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Ford, who started her career as a teller at the credit union and says she understands the employee saving experience considerably more closely as a result, was forced to freeze her employers unsustainable, existing DB plan and transition to a 401(k) model. In order to retain engagement and boost involvement in that plan, Ford says Peoples Credit Union instituted free, one-on-one financial consultations and education for its participants but made it a mandatory requirement.
We wanted to make sure that employees knew what they had, and what they dont have in our plan. We saw that there was a lack of understanding of basic finances, and that people really didnt value our DB plan, she says.
Those consultations have made a world of difference, she adds. Overall, our participant rate has improved. We have also been evaluating some different ideas, such as creating sessions for workers in their 50s who are poised on the edge of retirement. We invite their spouses in, we provide dinner. And we also do a lot of surveys, asking our staff if they believe these are the best benefits we could offer.
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Gualtieri says that Music Choice also emphasizes the value of financial wellness education for its participants. Americans are taught to be perfect consumers from the day they are born, but nobody is talking about being financially savvy, or good ideas on investing, she says. That may not be the role of employers, but we have been doing it.
Tanner said his company had worked with the same plan provider for 13 years and things had gotten a little stale, both for plan executives and employees alike. There was a certain sameness if you mentioned the word 401(K), peoples eyes would glaze over, and wed get less than 50% attendance at any meeting we held, he says.
The company chose a new service provider and also adopted one-on-one education voluntary, in his companys case and Tanner says hes been impressed by the results. Most importantly, he says, was discovering the motivating power of a range of automatic features embedded in the new plan.
Our old plan had no automatic escalation, no default, but we adopted an automatic 5% escalation, rising to 10%, combined with a QDIA TDF default, and we had no negative responses, except for one single complaint, he says. Our participation rate has now jumped from 80% to 96%, as well.
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Both Gualtieri and Tanner say that modern benefits managers are generally in an unenviably busy position, left to help guide the post-employment financial success of their workers as just one of dozens of simultaneous duties every day at work, and that retirement advisers looking for some time with a benefits manager need to keep that in mind when planning their pitches.
I try to do five things when I start each day, but our offices end up being like a deli counter, Gualtieri says. I think its important for an adviser to understand the value of proactiveness when trying to get in touch with us, not just waiting for things to happen. Good advisers meet expectations; they check in frequently, they visit their clients a lot, and they go beyond just the normal 401(k) stuff.
And while its not standard practice for advisers to consider renegotiating their role in a retirement plan, especially when a company is not doing as well financially, Gualtieri says she feels that might also be a successful strategy. Good advisers also reduce their fees without being asked, when the plan assets are not there, she says.
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Tanner says he has a literal open-door policy for his plan participants, which means he often fields calls even from spouses, but that employees have come to value the time hes able to spend with them.
And hes also discovered the benefit of outsourcing many of the functionalities of his companys retirement plan, if only for his own mental health.
We used to entirely administer our own program, even the loans, and I was very happy to step out of it, he says. The service that the outside company provides is so much better.
