Corporate 401(k) $200MM-$1B

CGB Enterprises/Zen-Noh Grain

Plansponsor of the year winner icon WINNER

HEADQUARTERS: Mandeville, Louisiana





DEFAULT INVESTMENT: Vanguard passive target date fund series

EMPLOYER CONTRIBUTION: 50% of every $1 up to the IRS limit, as well as a 4% nonelective contribution (match is not capped at 6%)

ADDITIONAL PLAN: Nonqualified plan

“We couldn’t be more proud of where the plans are, but we’re not done,” says Karen Hollis, director of compensation and benefits at CGB Enterprises, Inc., a grain transportation company located in Mandeville, Louisiana. One of the holdings of grain exporter Zen-Noh Grain, CGB and ZGC both are determined to position themselves as employers offering best-in-class plans that let them recruit, retain, reward and retire a work force of 2,176 employees.

The two mirror plans, having a single investment committee and identical investment lineups and provisions, are understandably proud of a number of things: The combined participation rate is a robust 94.39%, with an average deferral of nearly 10.5% and an average income replacement rate of 84%—slightly lower for participants who do not use the available planning tools.

“When the market tanked, we doubled the match, from 25% to 50% up to 60% of [a worker’s salary] or the IRS [Internal Revenue Service] maximum,” Hollis says. “It was a reaffirmation of the company’s commitment to its employees’ retirement.” She adds that, regardless of what a participant puts in, the company discretionary contribution will be a minimum 4% of his salary, and potentially as much as 6%.

The plan sponsors have been deliberate in their choices for the plans’ design, investments, communication and costs, observes Michael Kozemchak, retirement plan adviser and managing director at Institutional Investment Consulting in Detroit.

“Those are the primary levers for a plan sponsor to pull, and they can alter a participant’s trajectory toward retirement,” he points out.

One decision was to switch from a guaranteed investment account product in the plans to a separate account guaranteed-investment contract in 2010, creating an investment that is solely for the CGB/Zen-Noh Grain participants.

In 2014, the plans conducted a request for proposals (RFP) for stable value—ultimately deciding to retain the investment manager but move to a separate account structure, thereby receiving a reduction in the investment management costs and further improving the crediting rate for plan participants.

The plans were able to obtain a market value to book of 104%, meaning that if the bonds held in the stable value account were to be liquidated, participants would receive $1.04 on each dollar. “This crediting rate isn’t going to go away tomorrow,” Kozemchak says. “Participants will enjoy that high crediting rate for some time.”

Another investment move that CGB/Zen-Noh Grain completed was adopting a real asset option to act as a hedging investment vehicle in case of rising interest rates—in this case, blending Treasury inflation-protected securities (TIPS) and real estate and commodities into one vehicle to deflect market risk. “We’re at a 30-year low in interest rates,” Kozemchak told the plan sponsor, “and when they rise, there will be inflation.”

The plans are also exploring guaranteed income options, an issue on the agenda at the quarterly meeting this month; a subcommittee has been detailed to evaluate offerings available through the recordkeeper. CGB/Zen-Noh Grain has been mulling appropriate vehicles and deciding on the right time to add this product to the plans.

Hollis calls an income product a work in progress for the plans; although the idea is intriguing, the committee members are aware of the importance of the long-term decision.

Even before Zen-Noh Grain and ITOCHU purchased CGB, it was already a paternalistic and family-oriented operation, she notes. “We took very good care of our employees because they work for us,” she says.

“It’s not unheard of for people to stay as long as 30 years in the same job here, which brings tremendous value to our customers.”

That paternalism is present in the company’s communications with participants. Embracing behavioral finance concepts allows communication to focus on messaging that will help drive action.

Kevin Tigges, vice president of relationship management and key accounts of the plans’ recordkeeper, Prudential, in Boston, gives sample wording that might be used in a communication to combat optimism bias, for example: “You could still be going strong when you’re older, but will your savings keep up? Experts say we need to save for and build for a triple-digit life.”

One challenge is how to spark participants to take action, Tigges says, explaining that “auto” features in the plan help answer the problem of participant inertia.

Last year, CGB/Zen-Noh Grain implemented auto-enrollment. “We go to those participants [who are not in the plan] every year and tell them they are giving up a great benefit, and we’re going to put them in the plan,” he says.

The opt-out rates are low—under 1%, Tigges says—and no participants have complained about the quarterly reminders. In the first quarter, for example, participants are prompted to register online. An email explains that registration takes very little time, and they need only click on “enroll now.”

“[Auto-enroll] is a great mechanism for reminding participants to participate,” he says.

The plans have also been proactive in dealing with communication delivery. “We often hear that, when the employee base doesn’t have email addresses, plan sponsors often step away from the communication because of the cost,” Kozemchak says.

Realizing that not all hourly employees were licensed to use a computer and therefore lacked access during the work day, the companies licensed their whole work force to company email addresses, which could be accessed via smartphone. These addresses were then given to the plan’s recordkeeper, so all participants could receive electronic, along with paper, mail.

“We also partnered with the recordkeeper [to receive] mobile texts,” Hollis says, “and employees can access videos that explain benefits—a tool we also use in onboarding as well as for existing employees.”

Additionally, CGB/Zen-Noh Grain’s tools include a Plan Health Scorecard that helps track progress against plan goals and objectives. An online retirement income calculator helps participants assess whether they are saving enough and offers a personal action plan that suggests changes they can make. Once the steps in the calculator are complete, the Achievement Meter generates a visual representation of plan engagement for the participant upon each sign-in. The plan committee tracks usage of the tools, and actions that occur after engagement. Nearly one-quarter of participants (22%) who completed the steps in the income calculator increased their deferral rate by an average of 3.18%, Tigges says.

Hollis points out that the chief executives and presidents of both CGB and Zen-Noh Grain place great emphasis on seeing employees who have worked for the companies be able to retire—and retire comfortably once they reach that age. “There is a tremendous effort to continue increasing the plan benefit,” she says. —Jill Cornfield

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