When NACCO Natural Resources made part-time and temporary workers eligible for the company’s matching 401(k) contribution, it wanted to make sure that they all took full advantage of the perk.
The company’s desire to help this segment of the workforce spurred a 401(k) plan re-enrollment campaign that called for automatically increasing the deferral rates of plan participants, a move that won Sarah Fry, vice president, associate general counsel and assistant secretary at NACCO, an Excellence & Innovation Award.
Not many companies give part-time and temporary workers a matching contribution, she said, adding that the new benefit motivated her to push for automatically increasing the deferral rates of plan participants contributing less than the 5% needed to maximize the company match. In other words, any of the 1,792 participants contributing less than 5% would automatically be boosted to a 5% deferral.
NACCO matches employee contributions dollar-for-dollar, up to 5% of their pay.
While employees could lower their contribution rate, the company discouraged them from doing so as they would leave “free money” on the table, Fry said.
In addition to automatically boosting everyone’s deferral rate to 5%, it also enrolled participants in auto escalation and re-enrolled workers who had previously opted out of the plan.
Very few workers complained or opted out of the changes because they were told about the changes in advance, Fry said.
“Our local HR staff made sure that everybody knew this was going to happen,” she said.
As a result of the campaign, the number of people contributing less than 5% dropped to 19 from 50. Only six opted out of the automatic annual 1-percentage-point increase to their deferrals, Fry said.
Part of the reason few people opted out of auto escalation or reversed the higher deferrals also had to do with two changes to the re-enrollment process, according to Fry.
In addition to shortening the length of time that workers had to opt out of the changes by one week, the company also timed the higher deferrals and the auto increase with the annual merit increase pay period, which mitigated the impact of the changes.
Plan participation also improved, ticking up to 99% from 97% in 2023.
By Fry’s latest count, only 10 people are not participating in the company’s $764 million 401(k) plan.
“We’re trying to figure out how we get to these handful of people,” Fry said. “I guess you’re going to have some people who are very stubborn and just don’t want to do it, and you just have to accept it.”
