Cheryl Johnson
Vice Chancellor of Human Resources
  • Total Plan Assets
    $5.3 billion
  • Participants
  • Participation Rate
  • Average Deferral Rate
  • Default Deferral Rate
  • Default Investment
    TIAA-CREF Lifecycle Funds
  • Automatic Enrollment
  • Automatic Escalation
  • Employer Contribution
    100% on 8% prior to vesting, then 150% on 8%

hen the University of Pittsburgh (Pitt)
launched its “Write Your Own Financial Story” communications campaign last year, it wanted to get employees more interested in, and invested in, their financial future.

“Everyone has passions and dreams, but not everyone is thinking about a retirement that could potentially be more than 40 years away,” observes Assistant Vice Chancellor, University Benefits, John Kozar. He says the university wanted to illuminate “how an individual’s goals, passions and dreams for the future—whether they are financial or not—directly tie in to understanding how and why that person should be saving now.”

As the campaign began, university officials especially hoped to see more employees increase their contribution amounts and attend one-on-one meetings with advisers from its recordkeeper, TIAA, Kozar says. In the first half of the year alone, over 2,100 participants increased their contribution amount. And over 750 employees attended one-on-one sessions with TIAA advisers, which sometimes included investment education and investment allocation fiduciary advice. That was a 54% increase in meetings compared with the first half of 2017.

The “Write Your Own Financial Story” campaign stemmed from the university’s collaboration with TIAA to develop a more personal approach to employee retirement saving, says university Benefits Supervisor Ryan Arrington. “We wanted to garner the interest of employees wanting to increase their financial literacy, as well as those employees who hadn’t thought about their retirement savings in quite some time.”

Plan Changes and Enhancements

The timing seemed right to reposition the school’s retirement-savings provisions with faculty and staff, because of recent plan changes and enhancements, Kozar notes. In 2015, the university had moved to a single recordkeeping platform with TIAA.

Later shifts included reducing the 403(b) plan’s investment menu, adding a new 457(b) plan, negotiating a 60% initial reduction in recordkeeping fees—with subsequent reductions of 10% and 25% also negotiated—and introducing a self-directed brokerage window option.

A desire for administrative simplicity and lower fees was what motivated Pitt’s consolidation to a single recordkeeper. “The move to a single platform was also part of a longer-term plan,” Kozar says. “We knew that we wanted to reduce the number of funds we had on our menu, and consolidating to one platform made it easier.” Recordkeeping fees continue to be paid by participants via revenue sharing utilized in the plan’s investments, he says.

The investment menu streamlining, which took effect a year ago March, trimmed the number of plan investments from 110 to 50. Kozar says Pitt consolidated the menu based on a strategic analysis that looked at factors such as performance and amount of investment overlap. “We also wanted at least one investment—and more than one in some cases—in each box of the Morningstar Style Box, so that we were covering our bases,” he says.

Also last year, the university added a 457(b) plan. “We hire a lot of employees who have good incomes, and many also have a dual-income household,” Kozar says. “Certainly, that’s a population who could benefit from having additional money to put away on a pre-tax basis.” As of mid-March, 491 Pitt employees had started to participate in the 457(b) plan. “I expect that number to grow, over time, and eventually be closer to double that,” he adds.

Back in January 2016, the university’s defined benefit (DB) plan closed to all nonunion faculty and staff, and unionized employee groups negotiated the end of their pension plan participation for new hires over a 12-through-18-month period. Employees who started working for the university before January 2016 still actively accrue benefits in the pension plan. Those employees do not get a 403(b) match, though they still may contribute to that plan.

Employees hired after the pension plan’s close get the employer’s 403(b) plan match, which is 100% on up to 8% of pay. These employees become fully vested after three consecutive years of working at least 1,000 hours a year. Once vested, an employee can receive a higher match of 150% on up to 8%.

These participants also may utilize an accelerated match option, in place since 1978. They may elect to receive a 14.5% employer contribution if they defer 8%, starting no earlier than at age 52. The accelerated match ends after 10 years or at age 65, whichever comes first.

On average, Pitt faculty retire at 69 and staff members at 65, meaning some staff retire earlier. The accelerated match can come in particularly handy for employees planning to retire early and not wanting to miss out on the match money they would otherwise receive in their career’s last years. University employees are eligible to retire and to get retiree medical benefits starting at 62.

“If you know you’re going to retire at 62, for example, there’s no reason not to get the accelerated match,” Kozar says. “The caveat is that it’s a 10-year benefit, so once you exhaust it, you’re not going to get any additional match.” Therefore, an employee who takes the accelerated match but ends up deciding not to retire early could run out of employer match contributions before he leaves his job.

Explaining the Changes

Last year, the university hosted more than 30 campaign-related events, including in-person and digital sessions. One was a November campus visit by TIAA President and CEO Roger Ferguson, for a full day of talks and presentations with different university groups. “The focus of all of our events was on the importance of retirement savings, best practices and, especially, the ‘Write Your Own Financial Story’ theme,” Arrington says.

In support of the theme, the school enhanced its office of human resources (HR) website. The site now includes simple explanations of the recent changes, plus a “Their Financial Story” section with real-life examples of how Pitt employees are planning for their financial future. “This new section allowed us to present the enhancements as more about the individuals they were affecting, as opposed to just a list of updates,” Arrington notes.

To gather the stories, the school asked participants to answer questions about their passions, financial goals and hopes for retirement; then it posted some of the responses along with pictures of those employees. “Many organizations talk about their plans and how ‘good’ they are, but few put the focus on those in the plan,” Kozar says. “The theme of ‘Write Your Own Financial Story’ emphasizes the individual. We wanted to communicate that it didn’t matter where in life someone was—that person always has the chance to attain the retirement they want.”

Judy Ward

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