What best-in-class retirement plan sponsors do differently
See which companies were named 2019 Plan Sponsor of the Year finalists and winners by PLANSPONSOR.
If this makes you wonder, “Can my organization become a best-in-class retirement plan sponsor?” The answer is, “Yes!” And it doesn’t matter what industry, the number of employees or the asset size of the organization.
They not only work closely with their advisor and service provider, but there’s several other things they do to set themselves apart.
Create a culture of financial wellness
There’s 1 thing each of these plan sponsors have in common: an organizational culture that’s passionate about its employee’s financial wellness and saving for retirement.
Retirement enrollment isn’t just a 1-and-done, check-the-box conversation for these employers. There’s a true commitment and genuine interest from leadership in helping employees save enough to be better prepared for retirement.
“Their benefits team is driving the benefit discussion with employees from day one of employment,” according to Mark Fry, senior relationship manager at Principal®, working with category winner Intermountain Power. “And it’s not just HR, many within the organization are vocal proponents of the retirement plan. It’s just a part of their culture.”
A retirement plan design that embraces automated features
Successful plan sponsors are not just interested in meeting plan design benchmarks, but they want to exceed them. They embrace the concept of retirement readiness and understand how automated features can help nudge participants to save. They work closely with their advisors and service providers for solutions and plan features that best meet the needs of their employees.
“I call it courageous plan design. It’s not always easy, but effective,” says Shannon Miller, senior relationship manager at Principal, working with finalist Harris Associates.
There’s not a 1-size-fits-all solution when it comes to plan design, but many of the finalists include:
- Automatic enrollment—with a default deferral typically 6% or higher
- Automatic annual increase—typically 1% up to 12% or more
- Matching employer contribution that’s beyond the typical 3%
- Roth IRA contribution
- Automatic reenrollment sweep
Retirement education tools and resources
These best-in-class retirement plan sponsors have a heavy focus on retirement education—offered either by the advisor or service provider. They also strongly encourage their employees to use digital retirement planning resources like retirement calculators, planners, and financial wellness programs.
Laura Leever, senior relationship manager at Principal, working with finalist OneAZ Credit Union says, “They are willing to put in the extra work to promote the resources that will help their participants. That means encouraging our monthly webinar or highlighting a different financial wellness topic each quarter.”
Always improving the retirement plan
Successful retirement plan sponsors don’t settle for the status quo when it comes to their retirement plans. They take a 360-degree view of retirement and are not afraid to try new and innovative ideas. Some offer other types of retirement plans such as defined benefit, nonqualified for highly compensated employees, and profit-sharing programs. When it comes down to it, it’s all about ways to help employees save enough and have enough in retirement to meet their retirement goals.
“The leadership at Taylor Guitars (category winner) really makes me work—in a good way,” says Maricela Ponce-Zamalloa, relationship manager at Principal. “They are continually asking for suggestions and thinking out of the box for the betterment of their participants.”
Congratulations to the following Principal clients
2019 Plan Sponsor of the Year finalists and category winners. These 6 finalists have an average participation rate of 95% and an average deferral rate of 8.8%.1
- Sumitamo Machinery Corp.
- Reliance Savings Bank
- OneAZ Credit Union
- Taylor Guitars (category winner)
- Harris Associates
- Intermountain Power Service Corp. (category winner)
If these stories have motivated you to make some changes to your organization’s retirement plan, talk with your financial professional or third party administrator, if you work with one. Or give us a call. We want to help. If you have a retirement account call us at 877-475-3436.
1 As of March 2019, RIS Finance.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
PLANSPONSOR is not an affiliate of any company of the Principal Financial Group.
Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, Iowa 50392