EMC implemented automatic enrollment for the 401(k) plan, which is record-kept by Prudential Retirement, in 2014.
It enrolled new hires at a 6% deferral and
included 1% automatic increases. Since
implementing auto enrollment, participation has risen from 86% to 94.1%.
Effective January 1 of this year, the
plan began using a safe-harbor design.
That included changing the match to
dollar-for-dollar up to 4%, a 1% increase
from the previous match. The plan also
moved to immediate match vesting,
eliminating its required three-year wait
Additionally, the plan recently
began annual re-enrollment of nonparticipants and low-saving participants
into the 401(k). EMC had found that the latter group often
stopped or decreased their deferral to deal with a temporary
financial situation, then simply forgot to reset their contribution
rate, says Aaron Segar, EMC benefits supervisor.
“Any employee who is below a 6% deferral—from zero up
to 5%—we will automatically enroll at 6% and set that participant at 1% auto-escalation a year, up to a 75% limit,” Seiler says.
Whereas the plan essentially has not set an auto-escalation
ceiling, 75% is its deferral limit, he notes.
Regardless of the limit, Seiler says he would be happy to see
participants reach at least a 15% annual contribution to their EMC
The survey revealed that very few
EMC employees lacked basics such as
a funded emergency-savings account.
But they do want a better under-
standing of their individual retirement
outlook. “They want to learn more
about issues such as ‘How do I go from
accumulating savings as an employee
to starting to spend my savings when I
retire?’” Segar says.
Pre-retirees as well as other EMC
employees have access to free one-on-one meetings with Advanced Capital
Group, the plan’s adviser, which sends
representatives on-site monthly.
The employer also wants to better
educate participants on how to utilize
the tools available to help them with their retirement planning,
such as Prudential’s retirement-income calculator. These tools
help the employees grasp what they need to do to achieve a
secure retirement—and to not just rely on the cash balance plan.
“We talk about the need to be aware of what your current
retirement-savings status is,” Nigut says. “We want employees
to understand, ‘Am I saving enough?’ It’s not something where
we want to say, ‘Hey, we’re going to take care of you 100%.’ We
tell our employees, ‘ This [cash balance plan] will get you headed
in the right direction.’” —Judy Ward
Caltech’s “Picture Your Financial Future” campaign was launched
to raise retirement planning awareness and target new and young
employees. Remote access boosted attendance by 142% from the
prior year, and one-on-ones with advisers increased participation. This private university provides a 403(b) base plan and offers
voluntary 403(b) and 457(b) plans.
Oklahoma State University and A&M System
When Oklahoma State University and A&M System reduced
10 recordkeepers to one, the result was a 42% decline in fees
and adoption of a three-tiered investment menu. The streamlining
slashed most of 1,000 investment options, allowing access to
lower-priced share classes. New employees now choose between
two employer-funded plans, a defined benefit plan and a 401(a)
defined contribution plan.
Read the full finalist profiles on plansponsor.com/PSOY2017.
“We have sold
employees on the
retirement accounts. With the plan’s design, that will happen
quickly, even for younger employees. If employees contribute 6%
and get the 4% match, that puts them at 10% for the 401(k).