PLANSPONSOR - April/May 2019 - 39

2019
78% on Track to Replace 90%-plus of Income
Today, says Kevin Dulitz, vice president of employee benefits
at intellicents and financial adviser to the plan, 78% of SEH
employees are on track to replace over 90% of their pre-retirement
income. While the ESOP is a help- " We estimated, looking at
employees of 25 years or more, that they will definitely satisfy over
20% in the ESOP, " Dulitz notes-the bulk of workers' savings,
50%, is in their 401(k) account, plus 25% in Social Security.
Ninety-two percent of workers defer 6%-the automatic
enrollment rate-or more of their income to retirement savings;
37% of that group save 6% and the rest, between 7% and 15%,
says Dulitz. Only 8% of employees contribute 5% or less. The
company matches 25% on up to 6%, plus it makes a 7.5% ESOP
contribution, for a total of 9%.
contributions and ESOP rollovers include and showing how
much SEH has contributed since that plan began. Additionally,
the company holds events, such as a happy hour or a celebration
for a stock price, every quarter for the purpose of discussing
employee ownership.
The investment committee has four member seats: Fraser's
and three, with revolving tenure dates, for employees. " The
committee members bring new ideas every year, " Dulitz says.
Because SEH has 800 employees, spread over multiple offices,
to draw from, " the committee doesn't get stagnant with redundancy, "
he says.
That body does not make final decisions on plan design but
" It's hard to influence a Vanguard
Fund in your 401(k), but it's easier
for employees to influence the stock
price of SEH. They feel a little more
connected with our ESOP. "
" They are very paternalistic when it comes to their employees
and retirement plans, " Dulitz observes. " They put a high value on
the plans; they want to make sure their employees are succeeding
and can reach their retirement goals. "
To make it easy to get started, SEH allows immediate eligibility
to the 401(k) plan; participants start receiving ESOP contributions
after completing one year's employment.
Having both plans to save in has incentivized participants
to up their deferrals, Fraser believes. Between even just a 6%
deferral, the company match and an ESOP contribution, a participant
can save 15%.
Engaging Participants for Success
The company educates workers on the basics of corporate valuation,
to help them understand what drives the company's share
price, and maintains transparency on internal financial statements,
Fraser says. Participants can see the company's profitability
and have the option to review its financial statements
monthly, he says.
SEH sends Fraser on tour, every other year, to its 30 offices
to promote retirement readiness and the two retirement plans,
plus hosts an employee resource group dedicated to young professionals
who have adopted the ESOP.
The company regularly displays posters highlighting
various aspects the plan-e.g., clarifying what the tax-deferred
makes recommendations to the SEH board of directors-whom
employee owners vote for-if they want to modify investment
options or plan provisions, for instance,
Dulitz says.
Fees and Funds
SEH pays for recordkeeping/custodial
services, but when the company hired
intellicents, it changed its fee arrangement
from basis points (bps) to a flat perparticipant
fee-a move that saved the
company $60,000 annually.
This January, SEH negotiated a
decrease in fees from recordkeeper
Fidelity, resulting in an 8% cut. The 401(k)'s total fees, for investment
management, administration/recordkeeping, custody,
trustee and advisory, and other fees, is .502%.
Along with fees, the company benchmarks individual
fund lineups and offerings, and may change the fund during
the course of the year, depending on manager turnover or poor
performance on a weighted scale, says Fraser.
The company's investment lineup has 24 core funds,
including a mix of passive and active funds, a Vanguard targetdate
fund (TDF) suite and managed portfolio options.
All told, the aim of the plans is to ensure that all participants
will have saved enough to live out their retirement years comfortably.
" It's not just a goal that's fun to say, " Fraser says. " Our goal
is for everyone to have a well-provided-for retirement. "
-Amanda Umpierrez
Corporate 401(k) >$100mm - $500mm Finalists
Griffith Foods Group Inc. Alsip, Illinois
Harris Associates L.P. Chicago, Illinois
West Bend Mutual Insurance Company
West Bend, Wisconsin
Read the full finalist profiles on plansponsor.com/PSOY2019.
PLANSPONSOR.com April - May 2019 39
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