retirement plans; assist employees and their families in understanding their retirement benefits; manage the risk of retirement
plans having a detrimental financial impact on the company; and
aggressively manage the plans’ administrative costs.
The company decided that employees of all tenures should
have the same employer contribution rate in the new 401(k)
plan design, rather than giving longer-tenured workers from
the pension plan a higher contribution rate. “It gets to, as an
employer, do you want employees in different pools treated in
different ways?” Jarrell says. “Our message to employees is, ‘This
is one enterprise, one team, one plan.’ I want people to feel like
they are all a part of the same entity.”
To get a better sense of how to change the employer’s contribu-
tion, O-I worked with management-consulting firm Hay Group,
which put together data on where its 401(k) stood compared with
peer plans, says Chris Williams, O-I vice president, enterprise
remuneration. Hay Group does a competitive remuneration study
for the company about every two years, he says.
“We had some room for improvement with the 401(k),”
Williams says. “We were looking at a base contribution, plus a
maximum match, of 6%. Our assessment was that the competitive position we wanted to be at was an 8% contribution.” So to
add 2% total to the employer contribution, the plan increased the
base contribution 1% and the match 1%.
“Using a 70% income-replacement ratio, projections show
that when factoring in Social Security, 78.5% of employees are
now on track to be at that level or higher,” Williams says. “The
new employer contribution, the auto-enroll features and the
sweep were all designed to help employees achieve their retirement goals.”
Preparing Employees for Change
O-I told employees about the defined benefit plan change more
than a year in advance. “As we thought about how we wanted
to educate our employees on this change, we knew it was very
important that we didn’t tell people how to feel about it,” Strong
says. “We wanted to give them the information to educate them
and to allow them to engage in their retirement planning.”
The company’s multi-channel approach included holding
roughly 45- to 60-minute on-site group meetings, during work
hours. Asked how O-I explained the reason for the pension plan
change at those meetings, Strong describes the message as,
“To ensure that the pension benefit you have accrued remains
protected and available to you, we need to stop increasing the
liability that the company accrues. And we need to provide you
the retirement benefit differently.”
The company also explained that it wanted to offer the
same level of benefit to all employees, regardless of their
tenure, so all would accrue retirement benefits the same way.
At the meetings, the company also explained the key enhance-
ments to the DC plan and suggested actionable steps for getting
on the right track with 401(k) savings.
During the same time frame as the group meetings, the
plan’s adviser, PearlStreet Investment Management, offered
one-on-one meetings for employees who wanted a personalized
discussion. The one-on-ones usually lasted about 30 minutes, and
they included a comprehensive retirement-income projection for
the employee, as well as advice to help him bridge any savings gap.
PearlStreet continues to come to I-O’s main campus
monthly for those individual meetings. And, at least annually,
it does on-site meetings at O-I’s plant locations. The employer
has tracked follow-up actions by the workers who have attended
these sessions. “[ They] have a higher average deferral rate. They
also have a more-diversified portfolio,” Strong says. “And they
take fewer plan loans.” —Judy Ward
>$250MM – $1B FINALISTS
Greenwood Village, Colorado
To correct overpayment of administrative fees by revenue-sharing
participants, CoBank, a provider of financial services to rural
industries, revamped much of its 401(k) plan’s investment menu;
it later adopted its new recordkeeper’s revenue-sharing allocation capabilities, both actions, in effect, creating a zero-revenue-sharing investment menu.
Hoag Memorial Hospital Presbyterian
Newport Beach, California
The 401(k) at Hoag Memorial Hospital Presbyterian has reached
95.9% participation and 8% average deferrals by offering a
generous employer contribution—with extra for l0-plus-year
employees; utilizing automatic design features; and supplying individual financial counseling for employees. After the one-on-ones,
roughly 75% take some action.
League City, Texas
Having studied its work force demographics, chemical company
INEOS customizes the message of its retirement communications
and their method of delivery, for each of the five generations it
employs. The result: 94.5% participation. For younger workers, the
firm is exploring social media as platforms for education.
LSG Sky Chefs
Harmonizing all U.S. nonunion plans under a new recordkeeper—
nearly halving fees—helped make participation jump from 24%
to 82% at this Lufthansa Group subsidiary, a caterer to airlines
and convenience stores. Also key were plan-design changes and
targeting communications at low- and non-savers.
Read the full finalist profiles on plansponsor.com/PSOY2017.