PLANSPONSOR - October/November 2020 - 40

PLAN PROFILE
Tax Savings Aids the Plan
M
This sponsor used the money saved to increase its match
any people may know Aflac
Inc. for the duck featured
in the commercials. At the
heart of the corporation's business,
though, is keeping a promise- " a
promise to cover people in our contractual
obligations through insurance
products we think protect their
financial security, " says Chief Human
Resources (HR) Officer Matthew
Owenby. " We do it in the same way that
we take care of our people. "
Between the U.S. and Japan, Aflac
has more than 14,000 employees who
focus on the business and about 250
HR staff who focus on the people. " I
fully understand the business side of
our business, " Owenby says, " but my
default position is to be an advocate
for our employees first, which usually
works out for the company as well. I
threshold, Aflac made it easier for lower
earners-e.g., younger workers and
those in entry-level jobs-to maximize
the company match. These contributions
were part of a broader pledge to
invest $250 million in employee benefits
and community outreach within
three to five years after the Tax Cuts
and Jobs Act took effect.
Owenby also considered the limited
Matthew Owenby
represent the people, and to do that I need to know them-they
email me, call me, see me and I intend it to be that way. "
In addition, Owenby serves as chairman of the retirement
investment committee. He is responsible for the design and the
fiduciary aspects of the corporate pension and 401(k) programs.
The Tax Cuts and Jobs Act of 2017 reduced the corporate tax
rate from 35% to 21%, beginning in 2018. For Aflac, lower taxes
presented an opportunity to improve employee benefits.
Aflac increased its 401(k) contribution by a percentage point
from 50% on the first 6% participants deferred to 100% up to
4% and provided a one-time $500 401(k) contribution to all of its
employees on January 1, 2018. By reducing the company match
SNAPSHOT
PLAN SPONSOR: Aflac Inc., Columbus, Georgia
KEY PLAYER: Matthew Owenby, chief human resources officer
PLANS: 401(k), pension plan
NUMBER OF PARTICIPANTS: 5,500 in the U.S.
TOTAL PLAN ASSETS: $596mm
AVERAGE DEFERRAL RATE: 7.45%
PARTICIPATION RATE: 93.4%
EMPLOYER CONTRIBUTION: 100% of 4%, plus profit sharing
impact the cash bonuses seemed to have
made at peer companies-they made
people happy briefly but then were
forgotten. He realized, however, that the
money could also be used to invest for
their futures and continue to grow. " We
want employees to know that we care
about them long-term. And we recognize
that most Americans, including
some at Aflac, don't save enough for
retirement, even with our programs.
So, this was an opportunity to make this tax contribution an evergreen
reward, instead of a 'gosh that makes me feel good' reward,
and be able to benefit the employee long term. "
Communications about the change in the employer match
and the one-time contribution were multipronged: regular
internal communications, social media and internal meetings.
" We brought in groups of employees and said, 'This is what we're
doing' and had them ask questions and got them engaged. We
see our employees as partners, and it's important that we have
their [opinions] and support for the ideas we're going to implement, "
Owenby says.
Usually, when employers start to contribute more, " participants
almost by default will contribute less, " he says. " We were
happy to see, and continue to see, that the match did not impact
deferrals to the negative. " Even the pandemic has not lowered
employee contribution levels.
" We look at the mix of our employees and we know historically
that the younger, more inexperienced employees focus less
on long-term savings and retirement. With just under 38% of
employees classified as Millennials, we want to encourage good
behavior now so they benefit from the dollar-cost averaging long
term and use muscle memory to continue retirement planning.
Being educated about it is the difference between retiring in a
good way or a painful way. " -Judy Faust Hartnett
40 PLANSPONSOR.COM October - November 2020
Art by Chris Buzelli
http://www.PLANSPONSOR.COM
PLANSPONSOR - October/November 2020

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