Creativity abounds in helping participants thrive

Trying to ease employees' concerns about paying off student loans while saving for retirement and seeking to encourage more contributions by participants in DC plans were the primary themes at the 2019 Excellence & Innovation Awards presentation.

Executives of five defined contribution plans were honored for their efforts during the awards presentation, which took place at Pensions & Investments' annual West Coast Defined Contribution conference in San Diego Nov. 3-5.

The judges also awarded honorable mentions to a plan executive and a trade association that represents government defined contribution plans.

This is the eighth year for the awards, presented by P&I and the Defined Contribution Institutional Investment Association, Washington, which put a spotlight on innovations and excellence in executing best practices to bolster participants' retirement readiness.

"It's our hope that recognizing and sharing the good work of these DC executives will encourage others to follow in their footsteps or devise their own unique initiatives for helping participants," P&I Editor Amy B. Resnick said. "Their programs revealed an incredible amount of creativity, planning and work that went into pushing these plans forward."

Added Lew Minsky, Palm Beach Gardens, Fla.-based president and CEO of the Defined Contribution Institutional Investment Association: "It's humbling to think about how far we've come in the eight years that have passed since we started these awards. Each year brings a new set of innovations and themes, and this year we saw a number of impressive nominations for creative and thoughtful plan sponsors that are doing innovative things to drive better outcomes for their participants."

Mary Moreland, executive vice president, human resources for Abbott Laboratories, Abbott Park, Ill., won an Innovation Award for guiding a project that rewarded participants with an annual company contribution to their 401(k) account if they made an annual student loan payment.

Under the Freedom 2 Save Plan, employees who put 2% of their annual salary toward paying off student loans will receive a company contribution of 5% of their salary — the equivalent of the company match — to their 401(k) plan accounts.

Even if they don't contribute to the 401(k) plan, the employees who make their loan payments are eligible for the company's contribution to their retirement accounts.

About half of the employees carrying student debt were contributing some money to their 401(k) accounts, Ms. Moreland said. Approximately 1,000 employees have signed up for this benefit since Abbott announced it in mid-2018.

"What Abbott Labs did with their Freedom 2 Save Program is truly impressive and the most innovative solution, in my opinion, that has been launched in many, many years for 401(k) plans," one judge wrote. "They have allowed their employees to continue to save while also paying down student debt — something that typically one has had to choose between."

Ms. Moreland was unable to attend the awards presentation. Diego Martinez, Abbott's divisional vice president, benefits and wellness, accepted the award for her.

Unum Group, Chattanooga, Tenn., took a different approach to helping employees reduce student debt by allowing them to convert unused personal time off into student loan payments.

The policy was the product of a two-year project directed by Carl Gagnon, who received an honorable mention.

"We wanted to be methodical," said Mr. Gagnon, assistant vice president, global financial wellbeing and retirement programs at Chattanooga, Tenn.-based Unum.

At the end of each calendar year, employees can convert a minimum of eight and maximum of 40 hours of unused PTO toward paying off student loans. PTO can be converted to student debt repayment for an employee's spouse or child as long as the employee is the signatory or co-signer of the loan.

Unum also provides an interactive student debt tool that allows employees to see all of their loans in one place. It conducts a targeted education to help families plan, save and pay for higher education.

Unlike Abbott Laboratories, Mr. Gagnon said the Unum program, which starts in January, isn't linked to its 401(k) plan. The structure of Unum's defined contribution plan wouldn't allow them to create something similar to Abbott's.

Mr. Gagnon estimated that 2,100 to 2,600 active U.S. employees carry student debt and that 700 to 800 will take advantage of the PTO conversion offer.

"Not only has Unum helped reduced student debt, they have invariably improved employee morale and most likely improved productivity of their employees," one judge wrote. "Other plan sponsors/corporations that allow employees to roll over unused PTO should embrace this solution for reducing student debt."

The University System of Georgia, Atlanta, enacted a massive restructuring of its defined contribution plans, which included consolidating record keepers, streamlining investment lineups and establishing a single online portal for the various DC plans.

The restructuring required university officials to communicate the changes to participants at 26 institutions with 42 campuses in the system.

Staff members of the university's board of regents, Lisa Joe, director of retirement programs and services, and Jason Culp, retirement plan manager, visited all of them, making more than 80 presentations in a little more than two months.

Implementing and communicating the many changes earned Ms. Joe and Mr. Culp an Excellence Award from the judges.

"USG's consolidation efforts required substantial work, with the outcome of increased compliance, clarity for employees and cost savings," one judge wrote. "Their work will make it easier for other large systems to do the same."

The restructuring took effect in May; the online portal was launched in July. The goal was "efficiency and ease of administration," Ms. Joe said. The result will be a $7 million annual reduction in plan fees for participants, or a 31% savings in plan costs, Mr. Culp said.

Creating an online portal reduced paperwork significantly. "There were stacks and stacks of paper for HR doing manual inputs" of participant information, said Mr. Culp. The online portal "improved the timing for their putting money into their accounts."

Yale University, New Haven, Conn., also took on a big project — providing a retirement income option — as it continued to restructure its four defined contribution plans.

Yale had been making changes in recent years — consolidating record keepers in 2015, streamlining the investment lineups in late 2018 — but the change that earned Yale executives an Innovation Award was the creation of the target-date fund qualified default investment alternative that incorporated a guaranteed annuity.

Hugh Penney, senior adviser for benefits planning, and Kate Castello, associate director for retirement planning, won the award for shepherding Target-Date Plus to participants of all four plans, which have 15,000 active participants and 12,000 retirees, some of whom are in more than one plan.

So far so, good: About 95% of participants have stayed with the QDIA since they were all re-enrolled in March.

Yale officials held "dozens of town halls" to explain the QDIA as well as creating a guide that explained "all the moving parts," Mr. Penney said. The "vast majority" of comments was positive, he added. "We were prepared for a lot of resistance but we got the opposite."

Target-Date Plus offers three separate risk profiles, ranging from conservative to aggressive, for each target-date vintage. Target-Date Plus allocations were designed to meet the investment strategies of different employees. For example, employees enrolled in a defined benefit plan would have their QDIA glidepaths more heavily weighted in equities. Faculty members who don't have a DB plan would have a glidepath more balanced between equities and fixed income.

"This is a creative way to create customization for 403(b) participants with guarantee lifetime income," one judge wrote.

The Missouri State Employees' Retirement System, Jefferson City, didn't need a restructuring, but it did need a better way for about 70,000 participants in the Missouri Deferred Compensation Plan to understand their retirement readiness and to make necessary changes to achieve their goals.

It's a diverse group of state, municipal and university employees, and MOSERS had to develop an approach that was simple to understand and easy to use, said Cindy Rehmeier, manager of defined contribution plans. "They need something they can do in five minutes or less," she said.

Creating a pair of interactive calculators, supported by a multimedia education campaign, earned an Excellence Award for Ms. Rehmeier.

The RetiremenTrack calculator lets employees know how much Social Security, their defined benefit plan and other retirement savings will provide as income in retirement based on an income replacement percentage that they have selected. They can make adjustments if they see they aren't meeting their goals.

The Grow Your Retirement Savings calculator enables participant to determine an eventual savings amount at retirement based on anticipated years working and savings.

Each calculator allows participants to make changes in strategy or contributions immediately.

"They kept it simple, which for the target audience was important," one judge wrote.

Getting more participants to contribute more to their retirement accounts was the goal of The Boeing Co., Chicago, and that's why Sarah Krause launched a three-week campaign focusing on those who hadn't contributed enough to get the full company match.

"We thought we did a good job with standard communications," said Ms. Krause, director of retirement strategy and executive compensation. "This year we wanted a targeted approach."

Judging from the results, the campaign was a success, leading the judges to give her an Excellence Award.

Using America Saves Week in February as a backdrop for the campaign, Ms. Krause concentrated on 21,000-plus active employees in its Meet The Match program.

More than 2,000 employees responded by meeting or exceeding contributions for the full match, and Ms. Krause said Boeing "underestimated" the campaign's effectiveness. Boeing is considering doing this campaign every year, she added.

Ms. Krause was unable to attend the awards presentation. Laura Mittelstaedt, retirement and financial well-being strategy specialist, accepted the award on her behalf.

The judges also granted an honorable mention to the National Association of Government Defined Contribution Administrators for developing an interactive map that shows states that allow — or prevent — deferred compensation plans to offer auto enrollment to participants.

These plans must rely on state and/or municipal laws to offer auto enrollment, and many have laws that prevent money being withheld from paychecks without individuals' approval. The laws weren't aimed at DC plans, but they have thwarted what many DC experts say is a best practice in plan management.

To get a comprehensive idea of what states are doing and to provide an education for plan peers, NAGDCA's interactive map offers a "one-stop shop for information," said Ms. Rehmeier, the immediate past president of NAGDCA, in accepting the award.

The winners

• Mary Moreland, Abbott Laboratories
• Hugh Penney and Kate Castello, Yale University
• Lisa Joe and Jason Culp, University of Georgia Board of Regents
• Cindy Rehmeier, Missouri State Employees' Retirement System
• Sarah Krause, Boeing

Honorable mentions

• Carl Gagnon, Unum
• NAGDCA