Corporate 401(k) $25MM - <$50MM

Midland Cogeneration Venture


HEADQUARTERS: Midland, Michigan




Not applicable

Vanguard Target Retirement Funds


ADDITIONAL PLANS: Not applicable

The 401(k) plan of Midland Cogeneration Venture (MCV) has 99.2% participation, a 9.9% average participant deferral rate, and a 102% average income-replacement ratio. And that is without automatically enrolling employees into the plan.

The 401(k) plan’s statistics have been in that high range for years, says Kelly Moldovan, director of human resources and corporate support at Midland, Michigan-based MCV, which supplies electrical and steam energy to customers in Michigan and elsewhere in the Midwest. “I believe that is a direct reflection of the richness of the benefit and the longevity of our employee group,” she says.

The $48 million plan has just 121 participants, and participants have an average account balance of $396,307. The plan has a match of 100% up to 5% of pay deferred by an employee, and an additional 5% profit-sharing contribution; the latter does not require an employee to make a contribution, meaning participants have 15% of pay contributed to the plan if they defer 5%.

And the employees at Midland Cogeneration Venture tend to have long tenures, both as employees of the company and participants in its 401(k) plan. “Over half of our employees have been with the company for 20 or more years, and have participated in the 401(k) since day one,” Moldovan says, referring to the retirement plan’s start in 1989.

Many MCV employees work in physically strenuous jobs, and the company designs and contributes to its 401(k) plan with the goal that employees can retire at or before age 62.

“We are thrilled with the employee participation rate in our plans, and are happy that our employees are able to go into retirement without the financial worries that others may have,” says Laurie Valasek, chief financial officer, vice president, and treasurer. “A significant portion of our employees work in the field, and a majority of these positions are physically demanding. As such, these employees have been retiring, on average, at 57.”

The energy company has had this contribution approach from the beginning. “MCV began its 401(k) contribution formula in the late 1980s, when MCV was formed,” Valasek says. “When the first employees were hired, a large percentage of them came from a local utility. At the time, most utilities offered defined benefit plans.” MCV did not opt to provide a pension plan, but instead decided to offer a defined contribution plan with a two-part employer contribution of a 5% match and a separate 5% profit-sharing contribution.

Making the generous 401(k) contribution obviously costs the company a significant amount of money. Beyond it being a nice thing to do for employees, Valasek is asked, why does it make sense from a business-case perspective for Midland Cogeneration Venture to do it? “This 401(k) contribution is part of the entire compensation package,” she says. “MCV currently has 122 employees, and the average tenure is 15 years. However, for the group of employees who have retired or are nearing retirement, they average 25 years of service. The generous 401(k) contribution is certainly a contributor to the long employee tenure, and minimizing employee turnover results in higher employee productivity and engagement.” —Judy Ward

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