Total Plan Assets: $31 million
Participants: 294
Participation Rate: 94.4%
Average Deferral Rate: 8.6%
Default Deferral Rate: 6%
Default Investment: Vanguard Target Retirement Funds
Automatic Enrollment:
Yes
Automatic Escalation:
Yes
Employer Contribution: 3% non-elective contribution + 50% on 6% match

Smithers-Oasis Company began annual reenrollments in 2014, and both non-participating employees and participants deferring less than 6% now get auto-enrolled at 6% and allocated to the plan’s default investment. Chief Financial Officer Jim Stull likes that impacted employees need to make an active choice annually.

“Every year, we automatically increase their deferral up to 6% at raise time,” says Stull of the Kent, Ohio-based company that makes foam used in flower arranging and other products for the global flower and plant business. “For most people, saving for retirement is just not on their agenda. If we left it up to employees, many probably wouldn’t do it. Our philosophy is to keep enrolling them, so that they have to keep saying, ‘Stop it.’ Hopefully, they give up at some point—and we can win this battle, for their benefit.”

In 2012, the plan implemented automatic enrollment at 6%, to maximize the match. “Everybody’s got the same issue: Employees are not saving enough, and they’re not taking full advantage of the match,” Stull says. The plan uses auto-escalation at raise time for participants saving between 6% and 9%, increasing them by 1% a year up to 10%.

Clementina Strong, the company’s human resources generalist, says employees don’t express much concern about the auto features, except occasionally about auto-escalation. She sits down with new hires to talk about the plan, and says that a couple of features usually win over any reluctant new hires: the 3% non-elective contribution the employer makes, and the plan’s 100% immediate vesting.

“Typically, when people jump jobs, they are doing it at or above their previous income levels,” Stull says. “We are trying to help them grab and save some of that raise. We want them to start socking some of that away for retirement, before they get used to the raise.”

Together, auto-enrolling new hires and annual reenrollments have made an impact. “Now, 85% of employees are contributing at 6% or above,” Strong says.

Although Smithers-Oasis has many blue-collar employees, Strong says auto-enrolled employees rarely stop contributing altogether. “I see occasionally where employees make a deferral change, to go from 6% to maybe 4%, to help them manage their expenses. But then they go back up to 6%,” she says. “It is very rare that I see someone go to zero.”

Smithers-Oasis offers education throughout the year to keep the importance of retirement savings on employees’ minds, Strong says. That includes facilitating one-on-one meetings with a certified financial planner (CFP) from the plan’s adviser, Akron, Ohio-based Wealth Impact Advisors, LLC. “Employees really like that, because they can sit down with the CFP and talk about their current 401(k) balance and their outside money,” Strong says.

Employees also have the option to work with Wealth Impact Advisors on a full financial plan if they want to construct a long-term, in-depth plan for their financial future. “We tell them, ‘It’s not about getting to retirement: It’s about getting through retirement,’” Stull says. “People are living longer, and you’ve got to get all the way through it.” —Judy Ward

 

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