Managers of corporate retirement plans must conduct extensive education campaigns to inform participants of innovations and significant plan design changes, benefits managers said Tuesday at Pensions & Investments' Investment Innovation and the Global Future of Retirement conference.
At General Mills Inc., Minneapolis, for example, the company used employee meetings, e-mails, video, postcards and microsites to describe major plan changes, said Jeanne Denz, director, global employee benefits.
General Mills had to explain the plan changes to salaried employees hired on or after June 1, 2013. They are not eligible for the company defined benefit plan and are eligible for a higher company match than other 401(k) plan participants — 8% vs. 6%.
In place of the DB plan, these recent employees received additional company contributions based on age and years of service.
At Reading Health System, West Reading, Pa., plan executives had to explain multiple changes to employees, said Todd M. Hassler, retirement plan manager. For example, although Reading Health System has had a defined benefit plan for more than 50 years, it said last year it would freeze the DB plan effective July 1, 2016. In addition, Reading Health said it would make enhancements to its 403(b) plan, including a matching contribution.
These actions represent “a significant leap” in plan design changes, Mr. Hassler said.
Last year, the plan hired a new record keeper, Lincoln Financial Group, to provide more extensive education, including on-site meetings, Mr. Hassler said.
At Alcatel-Lucent, Murray Hill, N.J., the company has emphasized meetings at major company locations across the country due to significant plan changes, said John G. Hickey, vice president global benefits. In early 2008, Alcatel-Lucent closed its defined benefit U.S. management employees plan to new employees. In late 2009, it froze the plan. In 2012, it offered lump-sum payments to DB participants. It is considering offering another lump-sum payment next year.
In their visits to major locations in the U.S., “we explained the reasons” why the company took these actions and how much money was saved, Mr. Hickey said. In preparation for next year, the company is conducting an RFP for a firm to educate participants about their choices. The company provides online education, and it will conduct group meetings to explain its actions, Mr. Hickey said.