Connie Frisbee
Human Resources Manager
  • Total Plan Assets
  • Participants
  • Participation Rate
  • Average Deferral Rate
  • Default Deferral Rate
  • Default Investment
    Unified Trust Unified Plan managed account
  • Automatic Enrollment
  • Automatic Escalation
  • Employer Contribution
    383.33% on 3%

At Newport Utilities (NU), in Newport, Tennessee, 100% of employees are on track to replace at least 70% of their income in retirement. A glance at the plan’s key statistics explains why.

The 401(k) plan for this provider of electricity, water, wastewater and broadband services has 100% participation. The employer matches 383.33% up to 3% of pay—participants automatically enrolled at 3% get an 11.5% match, for a 14.5% total contribution.

But most NU employees, who average 20 years of service, go further than maximizing the match. Employee deferrals average 13%, so with the 11.5% employer match, they average a hefty 24.5% total annual plan contribution. “Additionally, no loans or hardship withdrawals are allowed in our plan, so that prevents leakage and helps keep our plan costs down,” Human Resources (HR) Manager Connie Frisbee says.

Prior to 1985, Newport Utilities had a defined benefit (DB) plan, but concerns about funding requirements and administering the complex plan prompted the company to move to a 401(k). However, NU decided to adopt that favorable 401(k) match formula. And, as part of a 2005 recordkeeper conversion, the utility took the then-unusual step of implementing auto-enrollment for new hires, plus optional automatic escalation.

“Though automatic enrollment and escalation are now more common, we take pride in the fact that we were well ahead of the industry—and the large majority of retirement plans around the country—when we decided to add these provisions almost 15 years ago,” Frisbee says. “And what is amazing to me is that, historically, 50% to 60% of our participants have utilized the optional auto-escalation, which we call ‘Progressive Savings.’”

NU also has done two re-enrollments, which have increased participation and allocations to the default investment. The first came in the wake of its 2005 recordkeeper conversion, and the second when the plan introduced its recordkeeper Unified Trust’s UnifiedPlan managed account program as the new default investment, in 2011.

Frisbee says that, in addition to plan-design moves, NU’s culture has helped in achieving the midsize plan’s 100% rate for participation and for income replacement of 70%. “The employees encourage each other to save,” she says. “We find the older employees really encouraging the younger ones to make the most of the retirement plan.”

The plan’s advisory firm, Rather & Kittrell Inc., likes to tell participants when it meets with them that NU’s goal “is to make work optional for our employees,” says NU General Manager Glenn Ray. Newport Utilities likes that imagery because it helps employees visualize what being retirement ready might look like. Its leaders also believe that boosting retirement readiness by providing a favorable match helps productivity and morale, he says.

“We’ve taken that approach in creating a retirement program built around each participant’s individual circumstances,” Ray says. “And financial stress can be one of the biggest detractors from a healthy workplace. So if we can mitigate that stress by showing employees that they can retire, work takes on a different meaning. Then, they may not want to retire after all. It’s interesting to see how employees treat their work when they realize they may not have to do it anymore.”

Judy Ward

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