Meet the 2020 winners
Plan sponsor initiatives that focused on pre-retirees and the issues they face in retirement won top honors at the 2020 Excellence and Innovation Awards at Pensions & Investments’ Defined Contribution West virtual conference, held the last week in October.
Four of the seven winners centered their campaigns on people nearing retirement, addressing topics such as drawndown strategies, managed accounts and guaranteed retirement income that won’t run out.
Overall, the campaigns spanned the public and private sectors with some focusing on all participants and others looking to help targeted segments of their participant populations. Whether broad or narrow in reach, all incorporated new plan design elements or took new approaches to increasing plan participation and savings.
“By calling attention to the work of this group of DC-plan executives and sharing it with the industry, P&I and DCIIA hope to encourage others to be bold and work to ensure that retirement plan participants have the best opportunity for a good income in retirement,” P&I Editor Amy B. Resnick said. “Their programs showed that creativity and effort can move plans forward.”
The ninth annual Excellence & Innovation Awards – sponsored jointly by P&I and the Defined Contribution Institutional Investment Association – recognized two winners for innovation and five for excellence. The two executives honored with an Innovation Award – Eric Dill, senior vice president of human resources and talent development at the American Arbitration Association in New York, and AJ Padilla, chairman of the City of Austin Deferred Compensation Committee in Austin, Texas – took two different approaches to encouraging people to save more.
The American Arbitration Association took a broad view of retirement savings, attacking the issue of poor credit scores, which is often an obstacle to setting aside money for retirement, Mr. Dill said. “Something like 60% to 65% of American households could not absorb a $350 emergency bill for something like a car repair without having to put it on a credit card,” he said.
The City of Austin, on the other hand, took a simple but highly effective step to attack the endemic problem in the public sector of not including defined contribution plans in the open-enrollment process. The government employer, prohibited by law from automatically enrolling city employees in the plan, addressed the issue by having a tab for its deferred compensation plan added to the city’s online benefits portal.
The creation of the tab raised the plan’s visibility during the six-week open enrollment period and lured 5% of the 7,861 non-participating, eligible employees to enroll in the plan for the first time — a remarkable increase given the condensed time period, Mr. Padilla said.
The simple innovation caught the attention of the judges who commended the plan sponsor for a “great job” in incorporating the plan enrollment with open enrollment.
Jeffrey King, deputy superintendent of operations and finance for School District U-46 in Elgin, Ill., was among five plan sponsor executives whose campaigns were recognized for excellence.
Under Mr. King’s guidance, the nation’s second-largest school district reduced the more than 40 vendors serving its 403(b) and 457 retirement plans to just one, a massive consolidation that reduced plan fees and lowered complexity for participants.
“The plan sponsor did an outstanding job with creating a simple-to-understand program while reducing overall plan expenses,” one judge said.
The four remaining recipients of an Excellence Award – Mohammad "Mo" Raihan, assistant vice president of HR retirement services at New York City Health & Hospitals in New York; Lavina Mehta, the Glendale, Ariz.-based retirement plans manager at Bechtel Global Corp.; Katie Balestrieri, director of benefits and compensation at Orrick, Herrington & Sutcliffe LLP in San Francisco; and Mary Ann Edwards, manager of total rewards at JTEKT North America in Greenville, S.C.– were recognized for initiatives aimed at helping participants prepare for retirement.
New York City Health & Hospitals was commended for the ease with which plan participants were able to meet one-on-one with retirement counselors virtually rather than in person when COVID-19 hit. The virtual technology allowed the plan sponsor to reach larger swaths of its front-line workers than it otherwise would with in-person meetings during normal times. Bechtel was honored for a campaign aimed at participants over age 50, people who “want to have somebody walk them through their finances,” Ms. Mehta said.
As part of the initiative, Bechtel offered participants over the age of 50 one-on-one phone-based retirement assessments that included a conversation about how they might draw down their balances in retirement.
Orrick, Herrington & Sutcliffe’s campaign was also aimed at pre-retirees. The law firm introduced a new QDIA option that marries target-date funds with a managed account for participants aged 45 and up. The new “dynamic QDIA” offered through Empower Retirement defaults participants under the age of 45 into a target-date fund and those over 45 into a managed account.
JTEKT North America, too, was honored for an initiative to help pre-retirees with their eventual drawdown strategies. The manufacturer introduced a new mutual fund product – the IncomeFlex Target Day One Balanced Fund — that for a fee of 1% guarantees participants a set amount of retirement income for life.
Innovation Award Winners
Excellence Award Winners
Senior vice president of human resources and talent development at the American Arbitration Association
Sometimes the best way to get at a problem is to hit it sideways rather than head-on.
That’s the approach that the American Arbitration Association took to boost participation in its $75 million 403(b) plan. The association attacked the issue of poor credit scores — or the lack of credit scores — among American households, a problem that often leads people to secure payday loans and high-interest-rate credit cards to deal with emergency situations, said Eric Dill, senior vice president of human resources and talent development at AAA in New York.
“Something like 60% or 65% of American households could not absorb a $350 emergency bill for something like a car repair without having to put it on a credit card,” he said.
The stark realization spurred the association to launch a campaign to help employees with poor credit, an obstacle that the association felt might be preventing some employees from putting money into their retirement plan.
The campaign, which won Mr. Dill an Innovation Award, kicked off with the mailing of a $1,000 check to all employees to either establish an emergency savings fund or to pay down a high-interest-rate credit card bill.
Employees were shocked when they received the check in the mail, with some wondering whether the checks were legitimate. “We had some employees call us up thinking that the check was a scam,” Mr. Dill said.
In fact, the checks were just the first part of the educational campaign to teach employees about credit. The checks came with a letter from AAA President and CEO India Johnson, introducing the association’s credit-building initiative, which consisted of an initial one-hour on-site seminar on the importance of having good credit followed by a voluntary 18-month program of individual credit counseling.
As part of the 18-month program, employees had the option of taking out a $300 low-interest-rate loan that was repaid through payroll to help employees increase their credit score. The loan, if paid back according to the schedule, could increase employees’ credit score by 20 to 30 points, a difference that could “correlate to hundreds or thousands of dollars in interest payments on a car loan,” Mr. Dill said.
Employees who participated in the 18-month program met with counselors for an hour for the first couple of sessions, with the balance consisting of check-ins, Mr. Dill said.
One individual with a particularly low credit score due to payday and high-interest-rate loans taken out while unemployed was able to get his life back on track. As a result of the program, he was able to pay down the loans and then “repurpose the money” toward his 403(b) retirement savings, Mr. Dill said.
Program participation was high with 360 of the association’s 600 employees, or 60%, attending the on-site credit-building seminar and 27% signing up for individual credit counseling.
Judges commended the campaign for the indirect way in which it addressed retirement issues, with one judge lauding its “very thorough approach and clean submission with great details and results reporting.”
Feedback from plan participants was also strong. “We received hundreds of emails from staff talking about how they felt they were being helped,” Mr. Dill said.
Chairman of the City of Austin (Texas) Deferred Compensation Committee
Innovation doesn’t always happen on a grand scale. In the case of the City of Austin (Texas) Deferred Compensation Plan, innovation took the form of a simple tab on the city’s online benefits portal.
The $545 million supplemental retirement plan elbowed its way onto the website to make sure that it was part of the annual open-enrollment process, the most opportune time to promote the plan to the city’s 17,000 employees, said AJ Padilla, chairman of the City of Austin Deferred Compensation Committee.
Before the creation of the tab on the benefits portal, Mr. Padilla’s team tried to market the 457 retirement savings plan by meeting with different groups, including new hires, throughout the year, an “inefficient way of reaching employees,” Mr. Padilla said.
“We wanted to make it as easy as possible instead of having us go through all these goings around town,” Mr. Padilla said. The move proved to be effective. Raising the plan’s visibility lured 5% of the 7,861 eligible, non-participating employees to enroll in the plan during the six-week open-enrollment period beginning in October 2019, a remarkable increase given the short time frame, Mr. Padilla said.
“Most plans don’t see that sort of increase in participation in such a condensed period of time,” he said. In addition, the initiative enticed 12% of existing participants to bump up their contributions, an effect that Mr. Padilla didn’t expect.
“We got a twofer out of it,” he said. “Not only did we capture new people but people already in the plan updated and reset their benefit during the open-enrollment process,” he said.
In creating a tab for the plan on the benefits portal and making it part of the open-enrollment process, Mr. Padilla was borrowing a page from the private sector’s playbook. Unlike private-sector employers, the public sector does not typically offer the option of voluntary enrollment in the defined contribution plan during open enrollment, Mr. Padilla said.
“There’s a lot of interest in the public sector in what we did and the success we had and how we went about it,” Mr. Padilla said.
The innovation caught the attention of the judges, which recognized Mr. Padilla with an Innovation Award. While retirement is one of the top three commonly searched topics during open enrollment, most organizations simply focus on health and well-being benefits during this time, noted one of the judges. “The plan sponsor did a great job of incorporating enrollment in the defined contribution plan with open enrollment,” the judge said.
Roughly 8,400 of the city’s 17,000 employees are enrolled in the plan, a notable achievement given that the plan — under the state’s wage garnishment law — is not allowed to have automatic enrollment and employees are required to participate in an applicable pension system, Mr. Padilla said.
Still, Mr. Padilla is aiming for even higher participation. “The goal,” he said, “is to have everybody in it.”
Watch our interview with AJ
Director of benefits and compensation at Orrick, Herrington & Sutcliffe
Law firm Orrick, Herrington & Sutcliffe LLP wanted to go one step beyond merely offering a target-date fund as the qualified default investment alternative for the firm’s $680 million 401(k) plan.
After some shopping around, it decided to go with a new type of QDIA that marries target-date funds with a managed account for participants aged 45 and up.
“We felt it was the great new next step in furthering our participants’ retirement goals and doing what’s best for them,” said Katie Balestrieri, the firm’s San Francisco-based director of benefits and compensation, who received an Excellence Award for her efforts.
The new “dynamic QDIA” offered through Empower Retirement – the plan’s record keeper — would default participants under the age of 45 into a target-date fund and those over the age of 45 into a managed account. Participants initially invested in a target-date fund would eventually transition into the managed account once they hit age 45.
The law firm offered a managed account option in its 401(k) plan some 15 years ago but had to eliminate it due to compatibility issues with the record keeper it used at the time, Ms. Balestrieri said.
“We’ve always been looking for ways to reintroduce it because we felt that it was such a valuable option for people in our plan,” she said.
The firm introduced the new QDIA option in June 2019 with 90% of the plan’s 1,710 participants adopting it.
Since its reintroduction, the firm has observed positive participant behavior. More participants, for example, are now in age-appropriate investments, Ms.Balestrieri said. As of March 31, 83% of participants had an asset allocation within 10% of the age-appropriate target-date fund, up 15 percentage points from June 2019.
The new QDIA option has also led participants using the managed account to add assets outside the Orrick 401(k) plan. The new managed account service allows participants to link directly to outside 401(k)s, IRAs and other savings on a real-time basis. “The values are live,” Ms. Balestrieri said, adding that transparency into participants’ outside assets helps “get into the nitty-gritty of what their situation is.”
Since its introduction, 15% of participants using the managed account have added outside assets, she said. Ms. Balestrieri touted the low asset-based fee associated with the managed account. “Even at the highest tier of cost, it’s well below what anyone would pay to have their accounts managed professionally,” she said.
Mary Ann Edwards
Manager of total rewards at JTEKT North America
JTEKT North America Corp. worked hard to boost participation and savings rates in its $362 million 401(k) retirement plan and wanted to cap the six-year effort by helping participants draw down their assets in a way that would minimize their risk of outliving their funds.
“We’ve got people with some great accounts now who just really don’t know what to do with the funds when they retire,” said Mary Ann Edwards, JTEKT’s Greenville, S.C.-based manager of total rewards. “To preserve what you’ve saved for the length of time that you’re retired can be very difficult.”
To help take the guesswork out of how best to draw down savings, the manufacturer in October 2019 introduced a new mutual fund product — Prudential Financial Inc.’s IncomeFlex Target Day One Balanced Fund — that for an annual fee of 1% guarantees participants a set amount of retirement income for life. The product allows participants at the age of 55 to lock in a set rate of return on what it refers to as the “income base.” The lock-in rates range from 4.25% for participants under 65 to 5.75% for participants over 70.
“IncomeFlex is a targeted mutual fund that helps participants secure reliable retirement income that they can’t outlive,” said Ms. Edwards, who received an Excellence Award for her work.
The product works in tandem with the plan’s GoalMaker program, which essentially consists of Prudential target-date funds. Once participants hit age 55, a portion of their GoalMaker portfolio is automatically allocated to IncomeFlex depending on their investment style. If participants are conservative investors, 70% of their GoalMaker funds goes into IncomeFlex. If they’re moderate or aggressive investors, the allocations to IncomeFlex are 50% and 30%, respectively.
The introduction of the product helps combat participant inertia, Ms. Edwards said. “It gets people invested in it without them needing to take action on their own,” she said, explaining that participants don’t always engage with new funds, no matter how great they are.
For Ms. Edwards, IncomeFlex is a perfect middle ground between the pensions people used to receive and the 401(k) balances that many people now take to an insurance broker to purchase an annuity.
“It really is a neat instrument that helps merge what people were used to with pensions and what they’re accustomed to with annuities, but it keeps it more secure and within (the) plan,” she said.
Deputy superintendent of operations and finance at School District U-46 in Elgin, Ill.
Too many vendors selling too many products. That was the problem that Illinois’ second-largest school district — School District U-46 — looked to resolve when it slashed the more than 40 vendors serving its 403(b) and 457 retirement plans to just one.
“We didn’t have any control over the type of investments and the cost of those investments that our employees were subject to,” said Jeffrey King, the school district’s Elgin, Ill.-based deputy superintendent of operations and finance. “Some of the providers were aggressive in their sales and we had a lot of employees paying way too much for annuity-type investments.”
Vendors were going to school locations and meeting with employees to push investments that had high fees and surrender charges, and too many employees “were taking the direction” of the investment providers, Mr. King said.
To put an end to the bazaar-like atmosphere, the school district banned people from going into the buildings to sell products and initiated a search for a single provider to replace the gaggle of existing vendors.
The school district interviewed eight to 10 companies that submitted proposals for the job and then narrowed the search to two.
Not surprisingly, the planned consolidation generated a great deal of resistance among the existing providers. “We were fighting a disinformation campaign with at least one vendor that was trying to lobby against us moving in the direction we wanted to move through the employees that were invested with them,” Mr. King said. “Once they figured out that they were not in the final two, they went to our governing board and our cabinet leadership and did just about anything they could do to try to stop us from moving forward.”
The resistance proved futile as the school district had the support of leadership and the board. It ultimately went with AIG as its record keeper.
Judges praised the consolidation effort, recognizing Mr. King with an Excellence Award. “The plan sponsor did an outstanding job with creating a simple-to-understand program while reducing overall plan expenses,” said one judge.
As a result of the consolidation, investment option fees now range from 0.015% to 0.49%, down from over 200 basis points that some employees were paying prior to the change, Mr. King said. The investment menu was also simplified, reducing the level of complexity for the plans’ 2,000 participants. Before the consolidation, there were more than 1,000 investment choices between the 40-plus vendors, Mr. King said. Now, there are 15 mutual funds as well as a series of target-date funds and a self-directed brokerage window.
Since the switch to AIG as the school district’s sole record keeper in November 2019, AIG has given many on-site presentations, which has helped raise employee awareness of the changes to the 403(b) and 457 retirement plans, Mr. King said.
Since June, the assets in both plans doubled to about $10 million, a number that Mr. King would like to see “build strongly” over the next two years. “I think that will help us in the long run when we go back and start looking at the fee structure again,” he said.
Watch our interview with Jeffrey
Retirement plans manager at Bechtel Global Corp.
Even though Bechtel Global Corp. knew its pre-retirees were interested in learning about their retirement readiness, it didn’t fully appreciate how intense the interest was until it offered them one-on-one retirement assessments.
The demand was such that the engineering, construction and project-management company had to add two weeks to the original schedule to accommodate all the appointment requests. The retirement assessments were offered to participants over the age of 50 in the company’s $5.7 billion retirement plan as part of a seven-week targeted outreach campaign.
“All the spots were taken up right away,” said Lavina Mehta, the Glendale, Ariz.-based company’s retirement plans manager, who received an Excellence Award for her work.
The 20-minute assessments conducted by advisers over the phone centered on how employees might draw down their assets in retirement, including how to use a Social Security tool to help support the asset drawdown modeling, Ms. Mehta said. The sessions also gave employees an overall assessment of their retirement readiness.
“We found that as people get closer to retirement, they are ready to engage, especially the 50-plus group,” Ms. Mehta said. “They want to talk with somebody; they want to have somebody walk them through their finances.”
Pre-retirees not only signed up for the assessments fast; many were moved to take action by doing things like adjusting their deferral rates. Of those who scheduled assessments, 66% took action, a “really high rate in the DC plan world,” Ms. Mehta said. In addition to the assessments, the campaign featured a one-hour webinar as well as a retirement hub microsite.
Bechtel developed the targeted campaign because pre-retirees make up a significant portion of the participants in its 401(k) plan. About half, 47%, of the plan’s 16,580 participants are over the age of 50.
“We wanted to make sure that they were aware of the services available to them and that they felt as ready for retirement as possible,” Ms. Mehta said.
Some 256 of the 7,872 targeted employees, or 3%, scheduled appointments, with 16% attending the webinar and 16% visiting the retirement hub microsite.
“Considering we included both our current and former employees still in the plan in this campaign, we feel that the engagement is high compared to similar campaigns,” Ms. Mehta said.
Survey results were certainly positive, with 113 respondents giving the retirement assessment calls an overall average score of 4.77, the highest being 5. The survey rated the helpfulness of the retirement readiness conversation, the investment adviser’s knowledge and whether respondents were more or less confident about reaching their retirement goals.
The metrics supported the good reviews the company heard about anecdotally. “We got a lot of feedback from participants thanking us for putting it together and asking for more outreach,” Ms. Mehta said.
Watch our interview with Lavina
Mohammad "Mo" Raihan
Assistant vice president of HR retirement services at NYC Health & Hospitals
New York City Health & Hospitals’ sudden switch to having employees meet retirement counselors virtually rather than in person pushed it out of its comfort zone, but it’s glad that it did.
The nation’s largest public health-care system discovered that the move to virtual consultations due to the outbreak of COVID-19 allowed it to reach larger swaths of its front-line workers than it otherwise would with in-person meetings during normal times.
Many employees work overnight shifts, “folks who were hard be in touch with,” said Mohammad "Mo" Raihan, assistant vice president of HR retirement services at NYC Health & Hospitals in New York.
With the “modern virtual technology,” even hard-to-reach employees who work overnight shifts are now able to meet with counselors to discuss their participation in the health system’s $3 billion 403(b) retirement plan, Mr. Raihan said.
Before the pandemic, counselors met on-site with plan participants from 9 to 5 but now — thanks to the virtual technology — they can schedule meetings outside those hours for employee working later shifts.
“Our retirement counselors were able to help many folks very late in the evening and sometimes very early in the morning,” Mr. Raihan said.
The health system’s quick pivot to a virtual environment earned Mr. Raihan an Excellence Award for using technology in a time of crisis, an effort judges described as “notable.”
The move to a virtual environment provided a level of flexibility that went beyond giving plan participants greater scheduling convenience, Mr. Raihan said. Participants could meet with advisers face-to-face — albeit over a computer — from the comfort of their homes and have their spouses join the meeting. They could also view screens with the counselors, enabling them to review account information at the same time.
The greater flexibility kept the number of one-on-one counseling sessions on par with what it was before the pandemic, which Mr. Raihan found surprising.
“We were very happy to see that we haven’t gone below what we have been doing,” he said, explaining that the topic of retirement for front-line workers — at least during the initial wave of the pandemic — wasn’t the first thing on their mind.
Some 900 of the health system’s 38,000 plan participants had one-on-one virtual retirement counseling sessions with advisers from March to June, about the same as last year, according to Mr. Raihan. “This is a really excellent number,” he said, given that the workforce was accustomed to live rather than virtual meetings.
Mr. Raihan anticipates continued use of virtual meetings even after the pandemic subsides.
“Virtual is the new norm,” he said. “I feel that it’s going to significantly help plan sponsors work with employees about their retirement savings.”
Watch our interview with Mohammad
Meet the 2020 judges
Defined contribution consultants, DC sponsors and investment consultants were among the judges who worked with representatives of Pensions & Investments and the Defined Contribution Institutional Investment Association to evaluate entries for the 2020 Excellence & Innovation Awards.
The external judges were:
- Kate Castello, associate director of retirement planning at Yale University, New Haven, Conn.
- Jaime Erickson, former plan sponsor executive, Chicago
- Lisa Joe, director of retirement programs and services at the University System of Georgia, Atlanta
- Carl Gagnon, assistant vice president, global financial well-being and retirement programs, Unum Group, Portland, Maine
- Katie Hockenmaier, partner and west defined contribution segment leader at Mercer LLC, San Francisco
- Peg Knox, chief operating officer of the Defined Contribution Institutional Investment Association, San Francisco
- Marla Kreindler, partner at Morgan Lewis & Bockius LLP, Chicago
- Christopher Lyon, principal at Rocaton Investment Advisors/Goldman Sachs Asset Management, Norwalk, Conn.
- Lew Minsky, president and CEO of the Defined Contribution Institutional Investment Association, Palm Beach Gardens, Fla.
- Mikaylee C. O’Connor, senior consultant, principal and head of defined contribution solutions at RVK Inc., New York
- Michelle Ryan, former retirement plan finance manager for Los Alamos National Laboratory, Los Alamos, N.M.
- William Ryan, partner and head of North America DC multiasset solutions at Aon PLC., Chicago
- Anthony Tomich, head of pension investments at Farmers Insurance Group, Woodland Hills, Calif.
- Megan Yost, vice president, engagement strategist at Segal Benz, Boston
Judges from Pensions & Investments were Amy Resnick, editor; Julie Tatge, executive editor; Robert Steyer, reporter; and Margarida Correia, reporter.
Finalists for Excellence & Innovation Awards
Seven executives were honored as finalists in P&I’s Excellence & Innovation Awards:
- Art Cuaron, pension and benefits administrator, Tucson Supplemental Retirement System and Deferred Compensation Management Board
- Robert Grden, executive director, Wayne County Employees’ Retirement System
- Cheryl Maccano, director of benefits, Swift Transportation
- Becca Nelson, manager, NewYork-Presbyterian Hospital
- Erin Pawlish, treasurer, Standard Motor Products Inc.
- Carrie Quirarte, senior employee benefits administrator, Americo Services Inc.
- Tracy Tillery, senior director, total rewards, Westchester Medical Center Health Network