PLANSPONSOR - April/May 2019 - 37

2019
Adds Johnson, " I believe that, with the auto-increase, if you
gradually take them up by 1% a year, it's less of a burden on their
paycheck. And all of a sudden, they get to a 10% deferral. "
About 35% of the plan's participants opt out of autoescalation,
but many of those associates already make deferrals
at double-digit rates, Sweet says. If they stick with 1% autoescalation,
they could defer up to a cap of 90%. " We said, 'Why
stop it ourselves? They can stop it anytime they want, so let
it keep going until they want to stop it,' " she explains. " We're
using inertia to help them. "
Automatically enrolled participants are defaulted into
Vanguard Target Retirement Funds, but, for participants who
want more clarity on their investments' risk level, the menu
also includes risk-based model portfolios designed by the
plan's adviser, Spectrum Investment Advisors. " We have seven
model portfolios, and they go from very conservative to very
aggressive, " Sweet says. " The most conservative fund has 25%
in equity and 75% in fixed income, and the most aggressive
fund has 95% in equity and 5% in fixed income. " The portfolios
are rebalanced annually.
Sweet says Badger Mining includes risk-based funds on the
investment menu because some participants may feel they do
not understand a target-date fund (TDF)'s risk level. " We weren't
sure that associates always understand that the target-date 2060
fund is much more aggressive than the target-date 2020 fund,
whereas these model portfolios tell them the risk level exactly, "
she says. " They are labeled for every risk level, such as 'aggressive.' "
Participants who want to invest in a risk-based fund talk
with the plan's adviser about the best model portfolio for their
individual risk tolerance.
The Role of One-on-One Meetings
Badger Mining utilizes its recordkeeper Fidelity Investments'
tools to help participants calculate their retirement readiness.
Spectrum also comes on-site, during work hours, to meet with
employees. " They're required to attend a one-on-one meeting
with our adviser at least every third year, but they can do it more
often if they want, " Sweet says. " This is hard work, and many
of our employees are interested in early retirement. This way,
they can work with Spectrum to see the probability of that. "
It is important for BMC employees to talk periodically with
an expert about where they stand on their retirement readiness,
Johnson says. " If you're not looking at it, how do you know if
you're on track? " she says. " If you look at it at least every three
years, you're able to make some adjustments before it's too late. "
Besides recognizing the personal benefit, the company
also sees the business benefit of letting employees take time
during their workday to meet with Spectrum. " We are in a
pretty dangerous occupation: There's a lot of heavy equipment, "
Sweet says. " So we need for people to be at the top of their game
at all times. We don't want our associates to be worrying about
" We said, 'Why stop [autoescalation]
ourselves?
They can stop it anytime
they want, so let it keep
going until they want to
stop it.' We're using inertia
to help them. "
money while they're working. "
Other associates like to talk to Spectrum about broader
financial issues, such as saving for a child's college education.
" The people who come on-site from Spectrum are CFPs
[Certified Financial Planners], so they can help associates with
their whole financial picture, " Sweet says. Badger is also considering
arranging for Spectrum to help any employees who would
like one put together a holistic personal financial plan.
One of the plan's biggest challenges is to overcome
employees' impulse to move their account balance to a local
financial adviser who wants to handle their assets, Sweet says.
" Our plants are located in very rural areas, and these are the
kind of towns where everybody knows everybody, " she says. " Our
company has a reputation for having a very good retirement plan,
and many of our people contact us to say they're interested in
taking an in-service distribution and placing that money with
an outside adviser. They'll tell us something like, 'Joe Blow, who
I know because I play softball with him, says he can get me a
better return.' "
Badger Mining responds by suggesting that these participants
contact the plan's adviser to get a clearer sense of decision
factors such as the fee differential. " Spectrum gives our associates
unbiased advice, and Spectrum gets a flat fee, which we pay, "
Sweet says. " We encourage those associates to call Spectrum, so
they can understand what situation they're moving their money
to, and what situation they're moving their money from. In the
end, we have maybe only two or three of those people a year who
take their balance out and roll it into outside assets. " -Judy Ward
Corporate 401(k) >$50mm - $100mm Finalists
Almac Group, Inc. Souderton, Pennsylvania
SRC Holdings Corp. Springfield, Missouri
Standard Process Inc. Palmyra, Wisconsin
Read the full finalist profiles on plansponsor.com/PSOY2019.
PLANSPONSOR.com April - May 2019 37
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