PLANSPONSOR - October 2017 - 48

PLAN PROFILE
Helping to Meet
Participants' Goals
A plan sponsor's 'Small Steps' campaign aims
for increased deferrals and savings
T
he Michigan Office of Retirement
Services (ORS) administers retirement
programs for more than
530,000 participants across that north
central state. Participants are government
employees, public school employees,
judges, state police and National Guard
members, each individual having different
benefit structures, depending upon
his group, when he was hired and what
elections he had made.
In 1997, the Michigan legislature
froze the state pension. Any public
employee hired after that received a
mandatory employer contribution to the
401(k) plan and an employer match.
Currently, for state employees hired since
January 1, 2012, the state contributes 4%
and matches 100% on employee contributions,
up to 5%.
Kerrie Vanden Bosch, director of the
office says, " A significant portion of our
population has only a DC [defined contribution]
plan and never had an option to
participate in a DB [defined benefit] plan. "
Because of Michigan law, automatically
deducting DC plan contributions
from an employee's paycheck without his
permission was prohibited until early in
the current decade. It was not until legislation
changed this that the ORS could
avail itself of automatic features under
federal safeguards.
The plan sponsor and its recordSNAPSHOT
PLAN
SPONSOR
Michigan Office
of Retirement
Services
(ORS)
KEY PLAYER
Kerrie
Vanden
Bosch,
director
keeper, Voya, worked together with the
legislature to develop the language that
ultimately passed. Brian Merrick, vice
president, client relationship director at
Voya, says, " We had the opportunity to
review the legislative drafts and point
out the potential challenges and considerations
that were factored into the final
design and language of the bill. "
The legislation was passed in 2011 for
one group of employees and in 2012 for
a subsequent group. Since then, a more
global provision was enacted, allowing for
auto-enrollment for all public employees.
Initially, the ORS auto-enrolled
workers at the level giving them the full
employer match. " For most participants,
however, that was 3% or 5%, and, even
with the match, this contribution level
was probably not enough to result in a
financially secure future, " Vanden Bosch
observes. " We wanted to do more, so we
developed a plan to automatically increase
employee contributions even further. "
Merrick and Jillian Verspyck, Voya
marketing communications director,
worked in partnership with the ORS to
institute an enhanced enrollment and
contribution campaign for the employees.
They held focus groups and asked
employees how they preferred to receive
communications and which media they
responded to best. Armed with that background
information, they chose several
PLANS
401(k), 457,
frozen DB,
DB/DC
hybrid
48 PLANSPONSOR.com October 2017
PARTICIPATION
RATE
90%
Kerrie Vanden Bosch
conceptual directions.
A campaign was created to give 401(k)
and 457 plan participants a percentage
goal to reach their retirement savings
target, thereby encouraging them to save
more-10% of their wages, over time.
" We all gravitated to the theme of 'Small
Steps,' " Verspyck says of the campaign.
" It has a simple message. It's positive, and
it has the behavioral finance framework.
Participants can take the step to increase
their deferral, the state can help by autoincreasing
them by 1%, or the participant
can choose not to participate at all. "
According to Vanden Bosch, for the
first two years, only those who contributed
less than the full matching amount were
targeted. Starting last September, the
sponsor auto-increased all participants
who receive an employer contribution,
toward the maximum 10% threshold.
The campaign was successful as
demonstrated by the fact that, after 90
days, 92% of participants had retained the
1% increase, and 1.5% had decided to raise
their contribution rate even further.
" This campaign will run annually
to encourage participants to make steady
saving progress, " Vanden Bosch says.
-Judy Faust Hartnett
AVERAGE
DEFERRAL RATE
State employees,
7%; public school
districts, 5%
NUMBER OF
PARTICIPANTS
530,000, active
and retired
TOTAL
ASSETS
$7.9 billion
Art by Chris Buzelli
http://www.PLANSPONSOR.com
PLANSPONSOR - October 2017

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