best ways to engage employees in their retirement best ways to engage employees in their retirement

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  • Best Ways to Engage Employees Best Ways to Engage Employees in Their Retirement Planin Their Retirement Plan

    Emily Talley, CEBSEmily Talley, CEBS Benefits ManagerBenefits Manager

    Tanner Health SystemTanner Health System

  • The Starting LineThe Starting Line Tanner Health System in 2002Tanner Health System in 2002 –– Regional healthcare systemRegional healthcare system –– 1,600 employees1,600 employees –– Transitioned from DB to DC plan in 1987Transitioned from DB to DC plan in 1987 –– 401k Plan401k Plan

    1.5% Non1.5% Non--elective Contributionelective Contribution 3% Matching Contribution3% Matching Contribution 7 Year Graded Vesting7 Year Graded Vesting 13 Investment Options13 Investment Options Annual Education Meetings Annual Education Meetings

  • On Your MarkOn Your Mark…… Marking Off the Starting LineMarking Off the Starting Line

    Analyzing plan performanceAnalyzing plan performance –– Are we engaging our employees in the plan?Are we engaging our employees in the plan? –– Are employees saving enough for retirement?Are employees saving enough for retirement? –– Are employees investing appropriately? Are employees investing appropriately?

    Evaluate key metricsEvaluate key metrics –– Participation Rate Participation Rate –– 62%62% –– Average Deferral Average Deferral –– 3%3% –– Average Balance Average Balance –– $14,940$14,940 –– Asset Allocation Asset Allocation ––

    68% with 3 or Fewer Funds68% with 3 or Fewer Funds

  • Get SetGet Set…… Setting Plan GoalsSetting Plan Goals

    Determine Areas of ImprovementDetermine Areas of Improvement –– Improve key metricsImprove key metrics

    Participation levelParticipation level Contribution LevelContribution Level DiversificationDiversification

    –– Enhance employee appreciationEnhance employee appreciation of planof plan

    –– Improve attractiveness of plan as a Improve attractiveness of plan as a recruitment toolrecruitment tool

  • Get SetGet Set…… Setting Plan GoalsSetting Plan Goals

    Analyze demographics and identify Analyze demographics and identify barriers to plan participationbarriers to plan participation –– 85% Female85% Female

    Many primary wage earnersMany primary wage earners

    –– Average Age 40Average Age 40 Often no prior retirement savingsOften no prior retirement savings

    –– Largest job classification Largest job classification –– RNRN Generally altruistic vs. financiallyGenerally altruistic vs. financially--motivated motivated

  • Get SetGet Set…… Setting Plan GoalsSetting Plan Goals

    Establish Specific GoalsEstablish Specific Goals –– Achievable, QuantifiableAchievable, Quantifiable –– Goal 1: 5% Average DeferralGoal 1: 5% Average Deferral –– Overall improvement in other areasOverall improvement in other areas

    ParticipationParticipation DiversificationDiversification Employee AppreciationEmployee Appreciation RecruitmentRecruitment

  • GoGo…… Our First Steps Our First Steps –– Plan DesignPlan Design

    Goal: Increase ParticipationGoal: Increase Participation –– Added Automatic Enrollment FeatureAdded Automatic Enrollment Feature

    Most powerful tool for increasing participationMost powerful tool for increasing participation Determining contribution levelDetermining contribution level

    –– Match, vesting schedule & turnoverMatch, vesting schedule & turnover –– Minimum of 3% required for QACAMinimum of 3% required for QACA

    To grandfather or not to grandfatherTo grandfather or not to grandfather 2% contribution after 30 days 2% contribution after 30 days

    –– Reduction of 1 year waiting periodReduction of 1 year waiting period

  • Our First Steps Our First Steps –– Plan DesignPlan Design Goal: Increase Deferral RatesGoal: Increase Deferral Rates –– Realigned Employer ContributionsRealigned Employer Contributions

    Most powerful tool for increasing deferral rateMost powerful tool for increasing deferral rate Eliminated 1.5% nonEliminated 1.5% non--elective contributionelective contribution Increased employer match from 3% to 5%Increased employer match from 3% to 5%

    How Much Do You Save?

    0 100 200 300 400 500 600 700 800

    Less than 2%

    2% 3% 4% 5% 6% to 10%

    Greater than 10%

    # Em

    pl oy

    ee s

  • Our First Steps Our First Steps –– Plan DesignPlan Design Goal: Enhance Plan Appreciation &Goal: Enhance Plan Appreciation & Recruitment EffortsRecruitment Efforts –– Communicating Plan Design ChangesCommunicating Plan Design Changes

    Branding planBranding plan Manager briefingManager briefing Employee newslettersEmployee newsletters Employee meetingsEmployee meetings New Hire materialsNew Hire materials

  • The Next Leg The Next Leg –– InvestmentsInvestments

    Goal: Make Diversification EasierGoal: Make Diversification Easier –– What wasnWhat wasn’’t working?t working?

    Annual education meetings re: asset Annual education meetings re: asset allocationallocation

    –– Phase 1: Lifestyle FundsPhase 1: Lifestyle Funds Pros and ConsPros and Cons

    –– Phase 2: Age & Risk Based PortfoliosPhase 2: Age & Risk Based Portfolios Based on Underlying FundsBased on Underlying Funds Pros and ConsPros and Cons

  • The Next Leg The Next Leg –– InvestmentsInvestments Goal: Make Diversification Easier (ContGoal: Make Diversification Easier (Cont’’d)d) –– Phase 3: Default to Moderate Risk AgePhase 3: Default to Moderate Risk Age

    Based PortfolioBased Portfolio To grandfather or not to grandfatherTo grandfather or not to grandfather

    –– Managed Account AlternativeManaged Account Alternative Pros and ConsPros and Cons Selecting a providerSelecting a provider Monitoring performanceMonitoring performance

  • Turning Up the Heat Turning Up the Heat -- Automatic Contribution IncreasesAutomatic Contribution Increases

    Determining amount & timing of increaseDetermining amount & timing of increase –– Annual raises, market adjustmentAnnual raises, market adjustment

    Determining maximum percentageDetermining maximum percentage –– To qualify as QACA must be 1% per year to 6%To qualify as QACA must be 1% per year to 6%

    OptOpt--in vs. optin vs. opt--outout –– Financial considerations includingFinancial considerations including

    vesting, match & turnovervesting, match & turnover

  • Using Targeted Education Using Targeted Education to Turn the Cornerto Turn the Corner

    Making Group Education EffectiveMaking Group Education Effective –– Enlist support of senior managementEnlist support of senior management

    Following mention in annual CEO meetings,Following mention in annual CEO meetings, 9% of EE increased contributions9% of EE increased contributions

    –– Make it currentMake it current Address impact of recent economic Address impact of recent economic events on your participantsevents on your participants

    –– Make it relevant to your Make it relevant to your demographics and culturedemographics and culture

    You take care of others, You take care of others, itit’’s time to take care of yourself.s time to take care of yourself.

  • Using Targeted Education Using Targeted Education to Turn the Cornerto Turn the Corner

    Making Group Education Effective (ContMaking Group Education Effective (Cont’’d)d) –– Target by age groupsTarget by age groups

    Seminar: Seminar: Within 10 Year of Retirement?Within 10 Year of Retirement? What the current economy means for you.What the current economy means for you.

    –– Target by participation Target by participation or deferral ratesor deferral rates

    Comparing impactComparing impact on savings/takeon savings/take--homehome pay at various pay at various contribution levelscontribution levels

  • Using Targeted Education Using Targeted Education to Turn the Cornerto Turn the Corner

    Making Group Education Effective (ContMaking Group Education Effective (Cont’’d)d) –– Take advantage of provider resourcesTake advantage of provider resources

    Using a trainUsing a train--thethe--trainer approach to stretch trainer approach to stretch the communications budgetthe communications budget

    –– Take advantage of community resourcesTake advantage of community resources Free education offered byFree education offered by local financial plannerslocal financial planners

    –– Tip: Be sure to preview toTip: Be sure to preview to avoid sales presentationavoid sales presentation

  • Using Targeted Education Using Targeted Education to Turn the Cornerto Turn the Corner

    Making Group Education Effective (ContMaking Group Education Effective (Cont’’d)d) –– Address common retirement pitfallsAddress common retirement pitfalls

    LoansLoans RebalancingRebalancing Keeping longKeeping long--termterm perspectiveperspective

  • Using Targeted Education Using Targeted Education to Turn the Cornerto Turn the Corner

    Making Group Education Effective (ContMaking Group Education Effective (Cont’’d)d) –– Piggyback on other communication effortsPiggyback on other communication efforts

    Using health fairs to improve financial healthUsing health fairs to improve financial health

    –– Provide for immediate actionProvide for

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