Retirement plan savers with low deferral rates might not appreciate having their rates automatically increased, but energy products distributor U.S. Venture did just that and hardly got any complaints.
The company crafted a multipronged communications program that explained what it was doing and what employees might expect, a move that helped mute any potential criticism, said Stephanie Paulson, vice president of total rewards at U.S. Venture and a winner of an Excellence & Innovation Award.
“We maybe got two or three calls out of 4,600 employees,” she said.
U.S. Venture matches 100% on the first 2% that employees put into their 401(k) accounts plus 50% on the next 4% they put in. The company was looking to get employees to contribute 6% of their pay to get the maximum 4% employer contribution.
To do so, the company automatically increased the deferral rates of those contributing less than 6% to 6%, giving them the option to opt out of the increase.
“It seems like it’s definitely benefiting the vast majority,” Paulson said of the company’s new “auto boost” plan feature. “We continue to be thoughtful in how we communicate to make sure that those three who complain turn into zero, but you don’t always hit everybody with communication.”
As a result of the “auto boost,” 85 additional savers are contributing 6% or more to the plan on a pretax basis, bringing the percentage of people maximizing the match to 90%. The industry average is 69%, Paulson said.
The company, however, didn’t stop with those contributing less than the 6% needed to get the full company match. It also targeted employees contributing 6% or more by enrolling them in automatic escalation, a feature that increased their deferral rate by 1 percentage point a year, up to 15%.
The deferral rate auto-boost for undersavers and the auto escalation were part of a suite of auto features that was implemented to improve participation and deferral rates in the company’s $368 million 401(k) plan, Paulson said.
The company also automatically enrolled all employees in the plan and re-enrolled those who had previously opted out, moves that helped drive plan participation and average deferral rates, according to Paulson.
At the end of 2023, the plan had a participation rate of 93%, greater than the industry average of 83%.
“I am proud of the fact that we continue to see high numbers of team members continue to participate in our 401(k) plan,” Paulson said. “I think having 90-plus percent in the plan just shows that the financial education and the communication we're doing is helping our team members understand that it is good for them to think about their retirement and their financial savings.”
