The changes in allocations from the re-enrollment were dramatic. For the $701 million plan for salaried and non-union hourly workers, the allocation to target-date funds surged to 53.5% just after re-enrollment from 13.8% just before. For the $72 million union worker hourly plan, the target-date allocation grew to 69.8% from 25.4%.
Re-enrollment played a role, along with the investment menu changes, in weaning participants from what Bemis executives believed was a heavy reliance on stable value. Before re-enrollment, 13% of the total assets in the salaried/non-union hourly plan was in stable value. After re-enrollment, 2.5% of assets immediately moved to the money market fund, the stable value replacement.
For the union plan, stable value accounted for 24.2% of assets. After re-enrollment, 3.7% of assets moved to the money market fund.
Re-enrollment didn't cause a big change in fixed-income allocations. Previously, 7.5% of assets in the salaried/non-union hourly plan were in bonds; immediately afterward, the allocation was 5.6%. For the union hourly worker plan, the bond allocation went to 5.2% from 6.8%.
Ms. Higgins said the investment menu alterations and the re-enrollment represent part of the continuum of change that Bemis has been making in its DC plans since 2005, prompted initially by revisions in its defined benefit plans. “We asked ourselves: What is the best method going forward to maximize participation?” Ms. Higgins said.
Bemis closed its $411 million defined benefit plan for salaried and non-union hourly employees to new entrants in 2005. The plan was frozen on Dec. 31, 2013.
The $194 million defined benefit plan for union employees is closed to new entrants at most Bemis plants. At most Bemis union locations, new hires are eligible for profit sharing, Ms. Higgins said. “If a union employee is eligible for a defined benefit, they are not eligible for profit sharing — and vice versa,” she added.
Among the early DC plan changes, Bemis added a profit-sharing provision in 2006 to both plans: participants who contribute 3% of their salary are eligible for profit sharing of 2% to 5% each year depending on company performance.
The profit sharing is separate from a corporate match, which is offered only to participants in the salaried/non-union hourly worker plan. The match is 50 cents on the dollar for the first 4% of salary contributed pre-tax, then 25 cents on the dollar for the next 4% of salary contributed pre-tax.
Bemis also auto-enrolls new hires at a 3% deferral rate.
Beginning in 2008 for the salaried/non-union hourly worker plan and in 2012 for the union plan, Bemis conducted an annual “sweep” of all active, profit-sharing-eligible participants who were contributing less than 3% of their pay. All of these participants were auto-enrolled at a 3% default rate, and they are re-enrolled each year, if they deferred less than 3% of their pay, Ms. Higgins explained.
In 2008, Bemis initiated auto-escalation at 1% per year up to a maximum of 8% for the salaried/non-union hourly workers plan, raising the maximum to 10% in 2012. Also, in 2012, Bemis initiated auto-escalation for the union plan at a rate of 1% per year up to a maximum of 10%. Participants in both plans may opt out of auto-enrollment and auto-escalation.