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  2. DEFINED CONTRIBUTION
November 02, 2015 12:00 AM

5 lauded for DC breakthroughs with Innovator Awards

Common goal is to offer equality in benefits for all

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    Jacklyn Pearson
    The winners (from left): Shelly Schueller, Barbara Kontje, Mary Buonfiglio (standing in for Janet Cowell), Tarna Hunter and Dina Pon.

    2015's Innovator Award winners have all broken new ground to help close the gap in pension benefits inequality.

    At American Express Co., the global retirement team introduced a worldwide best-practices framework so that an employee working in India might have a similar chance of finding financial security in retirement as a colleague in the U.S.

    Elsewhere, plan executives in Wisconsin are using new tools to battle the persistent problem of gender differences in the retirement savings rate.

    GEICO deployed technology and behavioral science to nudge participants, especially a younger generation more used to instant gratification, to think about the long term. In North Carolina, state legislation enabled lower asset management fees — and potentially higher supplemental retirement income — for public school teachers, bringing them in line with other DC participants.

    One way or another, the five recipients of the Innovator Awards, sponsored by Pensions & Investments and the Defined Contribution Institutional Investment Association, helped to level the retirement playing field.

    This year's winners are:

    • Barbara Kontje, American Express director of retirement for the Americas and Smart Saving, and the company's global retirement team;

    • Shelly Schueller and Tarna Hunter, deferred compensation director and legislative liaison, respectively, at Wisconsin Department of Employee Trust Funds;

    • Dina Pon, assistant vice president of human resources at GEICO; and

    • Janet Cowell, North Carolina state treasurer.

    Along with six finalists who received Awards of Excellence, they all were honored at P&I's West Coast Defined Contribution Conference held Oct. 18-20 in San Francisco.

    “All of the winners really pushed above and beyond the norm to create something truly new to help provide plan participants with more options to help themselves,” said Amy Resnick, P&I's editor.

    The role of DC is evolving, said Lew Minsky, executive director of DCIIA.

    “Plan sponsors are starting to understand the direct relationship between retirement security planning and workforce planning,” he added.

    Global reach

    Ms. Kontje and the team at American Express helped launch a strategy aimed at providing more consistent retirement benefits across the world. Covering about $5.5 billion in worldwide DC assets, the initiative marks an important step to cater to a more mobile workforce at a time when defined contribution practices are speedily evolving.

    Economies of scale could help reduce costs and improve efficiency. The set of common principles will also become a keystone in the company's Smart Saving financial wellness program, which initially launched in the U.S. but is being rolled out worldwide. The Smart Saving program received a P&I/DCIIA Innovator Award in 2012.

    “This comprehensive examination of the best DC retirement practices and offerings across (American Express') companies globally is impressive,” one judge said. “It could be a roadmap for similar, global companies to do something similar.”

    For more about AmEx's Innovator Award, see: "Global retirement strategy guides DC growth for American Express"

    Gender economics

    Gaining scale from a different vantage point are Ms. Schueller and Ms. Hunter, who won grass-roots support for their campaign in Wisconsin to get more women to save more for retirement. Without a dedicated budget, the duo drew on volunteers from more than a dozen agencies to spread the word for women to take action, such as enrolling in a DC plan or contributing more of their pay to their retirement.

    One judge was particularly impressed by “how they accomplished their goals given the challenges that exist in the public plan marketplace.”

    For more about Wisconsin's Innovator Award, see: "Wisconsin women bridge pension gender gap with EMPOWER-ing program"

    Tech effects

    At GEICO, steps to help employees save more for retirement are backed by a comprehensive financial wellness program built on complex data analysis and behavioral science. Core to the initiative is an app capable of delivering day-to-day budgeting advice via text. But the insurer is also combining new technology with old-fashioned tactics such as a gourmet coffee truck to engage its relatively young workforce.

    “It recognizes their millennial population and offers tangible ways to drive better retirement outcomes and measure their impact,” another judge said.

    For more about GEICO's Innovator Award, see: "GEICO gets personal with millennials using digital marketing techniques"

    Counting fees

    Ms. Cowell, North Carolina treasurer, fought to pass legislation to offer a centralized 403(b) supplemental retirement option and introduced stricter fiduciary oversight for such plans. The move required difficult political navigation but ultimately could give public school teachers thousands more in annual retirement income as a result of lower fees and more suitable investment options.

    “Not every (state) treasurer would do something like this,” a separate judge said. “Maybe getting an Innovator Award would spur officials in other states to man up and follow her lead.”

    For more about North Carolina's Innovator Award, see: "State-backed program helps teachers keep more savings"

    Excellence Awards

    Six executives received Awards of Excellence:

    • Cindy Rehmeier, manager of defined contribution plans at the Missouri State Employees Retirement Systems, Jefferson City, introduced “Pocket Change,” a hands-on seminar to help participants come to grips with retirement preparedness. The session integrates real-time technology with individualized financial data analysis to get employees “to compare their pension income to what they will really need in retirement,” a judge said.

    • Francie Pumell, Atlanta-based corporate director of retirement plans for Republic National Distributing Co., set out to aggressively boost auto enrollment and automatic contribution increases. The company also put its money where its mouth is by matching contributions up to 8%, which is far higher than the industry norm of about 3%. Since implementation in 2013, the current income replacement ratio of contributing participants rose to 76% from 59%.

    • Joel Sheppard, marketing director at Utah Retirement Systems, Salt Lake City, is responsible for a program that provides plan participants in-house, personalized retirement planning using customized risk tolerance questionnaires. “Having independent internal colleagues that can walk participants through the myriad of decisions with the multiple plans offered is an extremely helpful benefit,” according to one judge.

    • Carl Vance, chief investment officer at Lewis & Clark College, Portland, Ore., led an initiative to steer the focus of its not-for-profit 403(b) plans to an income-replacement approach rather than wealth accumulation. While such ideas are not new, Lewis & Clark's solution takes members a step further by helping to manage income risk over time. “The shift from accumulation to decumulation is a very important strategy for DC and allows senior management to bring innovation to the market,” another judge said.

    • Deb Macchia, executive director of global benefits at ITT Corp., New York, took a route less traveled by helping to realign participants' investments through a re-enrollment campaign. Plan executives did their homework to find simple ways to engage plan members and involved an employee union to help smooth the transition. “They undertook this without a significant change like a record-keeper change or investment menu redesign that are more common reasons,” a separate judge said. “Doing a re-enrollment for the sake of it, for better participant outcomes but without these other catalysts, is still pretty rare.”

    • Janet McGorty, vice president and head of total rewards for the Americas at Delhaize Corp., sought to introduce new plan design elements for the company's retail employees. Operating in a sector with relatively low participation and low deferral rates, executives of the supermarket company decided to implement a series of changes that cater to the idiosyncrasies of their demographics. For example, they reduced the eligibility window to 60 days from the previous one-year period to accommodate the higher employee turnover rate. Based in Scarborough, Maine, Delhaize made “many changes at once in a notoriously difficult environment,” a judge said.

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