Intermountain Power Service Corp

These days, it is rare enough to work for a company with an active pension plan. But add to that retiree medical benefits and a 401(k) plan—good enough that 98% of workers participate—and you have a powerful combination that most employees can only dream about for their retirement income planning.

At Intermountain Power Service Corporation (IPSC), which provides electrical power for residents in Utah and California, employees live this dream every day.

“It’s a really rich package,” says Ellen Lewis, senior human resources (HR) analyst, at IPSC headquarters in Delta, Utah.

Employees are eligible to participate in the 401(k)—managed by recordkeeper Principal—from their first day on the job. The defined contribution (DC) plan is an integral part of the retirement package, and employee education reflects this. “We want [participants] to really understand the total picture. How does it all fit together collectively?” says Chad J. Larsen, president and CEO of Moreton Retirement Partners (MRP), referring to the 401(k) and pension plan benefits.

Even with the participation rate in the 401(k) at nearly 100%, and an average deferral rate of 10% after tax, IPSC continues to seek insight into what keeps employees from saving more.

“One thing we’ve learned is … people have financial stress outside of work that affects their ability to take advantage of the plan,” Larsen says.

For that reason, MRP conducts group meetings for IPSC on topics such as 401(k) basics, Social Security, debt management, estate planning and Medicare. Discussions about decisions related to Social Security have been a “key part” of financial wellness training the company provides, Larsen says.

Individual off-site meetings—conducted by Zac Huish, vice president of wealth management at MRP—are available once a month for those unable to make the scheduled meetings or who want to meet between them. The company also targets employees who have opted out of saving 6%—the automatic enrollment rate—to the 401(k) and encourages them to increase their savings rate to receive the full company match: 100% on the first 6% for employees hired before July 2015 and 50% on the first 6% for those hired after.

The individual meetings are a hit with employees, so much so that there is usually a waiting list to get one, says Jim Hill, manager of support services at IPSC.

“I have wonderful feedback from our employees about those meetings,” he says. The one-on-one sessions were initially geared to employees who were close to retiring, but, for the past few years, younger employees have increasingly taken advantage of the individualized sessions to get a head start, he says.

“We’ve found that we can address some big, high-level topics in the group meetings, but many times employees want to sit down one on one,” he says.

In addition to providing a wealth of educational options, IPSC always has an eye on plan fees. According to Larsen, fees are something the company has “been in tune with for many years,” as it was one of MRP’s first clients to implement fee levelization, around 2012. The company also renegotiated its fees several times with both its old and its new recordkeeper.

During a full request for proposals (RFP) in 2016, IPSC decided it was more concerned about the overall recordkeeping services than about just lowering fees, Larsen explains. It was then that the company started working with recordkeeper Principal, which offers participants a variety of in-person and virtual options to help them work toward retirement readiness.

A Digital Assist

Principal’s web options have helped to raise participant deferral rates, says Joleen Workman, the recordkeeper’s vice president of customer care in retirement and income solutions. She notes that a greater number of Principal’s clients’ participants have signed up for automatic escalation on the website since the 2015 launch of a digital assistant.

The assistant, My Virtual Coach, essentially performs a yearly checkup on participants’ accounts. It walks the employee through his account, cataloging any life changes that have occurred in the past year and ultimately asks if he wants to set up an automatic increase or raise his deferral rate. Of the 854 participants at IPSC, 49 have elected Principal’s Step Ahead auto-escalation, according to that company’s data.

The onboarding experience also has contributed to higher deferral rates. When new employees join the plan via Principal’s website, they are asked if they want to set their deferral rate at 10% to start or if they want to opt for auto-escalation, says Workman, adding, “It’s our way of making sure every individual has a personalized way to onboard into the plan.”

To enable retirement saving, Principal provides employee education through programs such as “Milestones,” which covers budgeting, health savings accounts (HSAs), college-education planning, and will and legal document preparation services, among other topics. The platform provides an online assessment of users’ strengths and challenges in reaching their financial goals, according to Principal.

401(k) plan design with features such as IPSC’s auto-enrollment is key to increasing deferral rates and helping employees prepare for retirement, Workman says. “If you think about how we get more Americans on track for retirement, plan design is the most important, the biggest lever.” Add effective education, and employees can become more confident and, therefore, feel more comfortable taking action, she says. “[IPSC does] an outstanding job of rallying around its employees and really doing lots of things to promote the value of the plan and why it’s important to [save],” Workman says.

A Focus on Wellness

Larsen, who has worked with Intermountain for about 15 years, says a reason for its success with retirement readiness is its concern for the financial wellness of its employees. “The company loves innovating to help improve its employees’ wellness,” he says.

Beyond the 401(k) and pension plan, IPSC’s retiree medical benefits cover employees, as well as their dependents. The medical benefits allow participants who want to retire at age 55 to pay the same medical premiums as do active employees. When an employee turns 65, the company pays the premiums for the Part D Prescription Plan and Part F Medicare Supplement Plan, Hill says.

“It’s been huge for them to be able to take advantage of early retirement,” Lewis says, referring to the availability of  the retiree medical benefits.

In addition, the lump-sum benefit added to the pension plan a year ago July has given employees even more options for how they can retire. Lewis estimates that 85% of those who have retired since then have taken the lump sum.

“We believe in trying to give our employees choice: what they want, what will work for their needs.”

—Corie Hengst