Corporate 401(k) >$1B
Susan Kassman Greenberg
TOTAL PLAN ASSETS/PARTICIPANTS: $1.1 billion/5,200
AVERAGE DEFERRAL RATE: 11.4%
DEFAULT DEFERRAL RATE: 3%
EMPLOYER CONTRIBUTION: 6%
AVANGRID is an energy and utility company serving millions of customers across dozens of states, conducting business in a highly regulated market. With its U.S. headquarters in Orange, Connecticut, the firm operates with a complex base of employees that has come together through decades of carefully controlled mergers and acquisitions, including populations of both union and nonunion workers.
According to Susan Greenberg, director of the firm’s retirement programs, although AVANGRID is technically a “new” corporate entity, due to its most recent merger, the original underlying company in fact has a 30-year history of partnering successfully with T. Rowe Price Retirement Plan Services to deliver a powerful retirement benefits package.
“Like many employers in our space, we have had to move away from legacy pension offerings in favor of defined contribution [DC],” Greenberg notes. “It has been fantastic to see our current ownership fully buy into the goal of making the defined contribution plans every bit as generous as the pension benefits once were.”
The company’s defined contribution program has more than $1 billion invested on behalf of some 5,200 participants, implying strong average account balances. Greenberg says she is particularly proud of her employer’s commitment to getting younger workers into the plan quickly via aggressive automatic enrollment. Since 2008, participation increased from 81% to 88%, with all signs pointing toward ongoing improvement.
“Notably, 60% of the employees enrolled into the plan since the inception of auto-enrollment in 2008 were under age 40 and 31% of them under age 30,” observes Doug Gardner, rewards manager. “Certainly a large part of the success has also come from regular committee and subcommittee education meetings, forming the backbone of an effort to educate both the employer and the employees on all the various auto-features and latest trends in best-practice plan design.”
Participants interact with the plan via highly targeted participant communications. For example, newly eligible, active employees under age 50, active employees over age 50, and terminated employees all see different messaging at different times. Also of note: “We are very active with our communication efforts and frequently offer to pilot certain communications in partnership with T. Rowe Price,” Greenberg says.
The firm’s T. Rowe Price relationship manager, Virginia Fenwick Holden, has been serving the plan longer than Greenberg or Gardner have worked at AVANGRID—and they both give her very strong praise, crediting the provider partnership for much of the plan’s success.
Holden has a laundry list of completed projects, some recent and some decades old, through which she has seen the AVANGRID leadership “fully demonstrate its commitment to providing a powerful DC program. … They have done a lot of things right for a long time.”
Recently, Holden says, the plan has been “examining going further with the Roth 401(k) idea,” which became a focal point after T. Rowe Price Retirement Plan Services showed AVANGRID that 60% of its employees who were automatically enrolled into the plan since 2008 are under age 40. A Roth feature was first added to the plan in 2014, but now the question being debated is whether the Roth approach would actually make a better auto-enrollment destination for employees with a certain wage and tax outlook.
“The analysis proves that Roth savings can benefit many younger and older AVANGRID employees, helping them to establish tax-diversified savings,” Holden says. “It’s just one example of how the plan sponsor is willing to be very forward thinking.” —John Manganaro