The old adage about not being able to control whether a horse that’s led to water will actually take a drink applies to retirement planning: Employees can participate in a 401(k) plan, but employers can’t make them save. Or can they?
“In an ever-changing retirement landscape, plan sponsors continue to look for ways to offer the kind of retirement program that will help them attract and retain top-notch employees and balance that with the other needs of the business,” says Luke Vandermillen, vice president of retirement and investor services at The Principal.
He will moderate a lively panel discussion, “What the Best 401(k) Do Differently,” at the EBN-produced 25th annual Benefits Forum & Expo Sept. 9-11 in Phoenix, Ariz. Each of the featured speakers hail from organizations that have landed on The Principal 10 Best Companies for Employee Financial Security program list, which is now in its 11th year. They will share tangible tactics and strategies that could be applied to any 401(k) plan.
“What’s impressive about this panel,” Vandermillen observes, “is they are from very different industries – manufacturing, financial services and aerospace technology – and each have faced the same kinds of challenges that plaque most growing companies.”
One of those panelists, Karen Roch, senior vice president of Credit Union West, believes her company’s culture of physical and financial wellness “is the next big mega-trend in the benefits world. We know incentives work to get employees to participate in wellness activities. We also use them to encourage financial fitness activities.”
Credit Union West has been able to rein in its health care claims and keep premium increases to single digits, producing savings that help fund a defined benefit and 403(b) plan. Employees also can earn money that the company will deposit into their health savings account.
“Education, especially in one-on-one meetings, is critical in helping employees makes the transition to this wellness culture and save effectively,” according to Roch.
Another panelist is Pamela Peterson, vice president of human resources at Davidson Technologies, Inc., a systems software engineering services provider for the aerospace and defense industries that elected not to skimp on benefit costs during austere times.
Her company left intact a 50% employer match on regular employee deferrals and catch-up contributions, as well as a 10% discretionary contribution. She says the latter feature helps highly compensated employees boost their savings rate.
“We’re in a very competitive market and certainly have to up our game when it comes to recruiting and retaining highly qualified employees,” she says, noting that the company’s 401(k) plan is a huge component of its employee benefits package.
Peterson explains that benefits are critical to helping grow the company and that employee turnover is seen as an impediment to meeting customer needs. “If we don’t take care of our employees, then we will suffer in the end,” she adds.
Garry Markle, vice president and chief operating officer of the Spiratex Company who also will be part of this panel discussion, shares Peterson’s biggest corporate challenge. “We are in a highly technical industry and we need to retain experienced employees,” he says. “We want them to make a career with us. Having a strong retirement program is a key incentive for them to stay. But they need to experience some success in that plan in order to value it.”
Spiratex offers a significant match, but found that employees were still not participating at high enough levels. There also was concern about how they were diversifying their investments. This led to several changes, including adding lifecycle funds, automatic enrollment and automatic escalation, as well as mandatory one-on-one retirement-planning meetings.
“We saw dramatic results,” he reports.
The bar for success, no doubt, will be raised in the future at a time when concern is mounting about the extent to which working Americans are amassing adequate retirement savings. Adds Vandermillen: “We are starting to see some sponsors measure the success of their program by how well participants are on track to retire with enough income to last the rest of their lives.”
For more information on the conference, visit www.benefits-forum.com.
Bruce Shutan, a former EBN managing editor, is a freelance writer based in Los Angeles.
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