2019 Plan Sponsor of the Year
Honorees

The Elevator Constructors Annuity and 401(k) Retirement Plan

FINALIST

Total Plan Assets:  $2.4 billion in annuity assets, $1.1 billion in 401(k)
Number of Participants: 28,532
401(K) Participation Rate: 53%
Average 401(k) Deferral Rate: 7.18%
Employer Annuity Contributions: $5/hour

While the 28,000 elevator constructor mechanics, apprentices and helpers are all covered by the National Elevator Industry Pension Plan, many of these union workers retire before age 65 because of the physical demands of their jobs. That is why, a little over two decades ago, the International Union of Elevator Constructors (IUEC) created the Elevator Constructors Annuity and 401(k) Retirement Plan.

More than 650 employers throughout the United States maintain the plan on behalf of the employees, who are covered by collective bargaining agreements that require the employers to make non-elective employer contributions to the annuity on the employees’ behalf. The union bargained to increase employer annuity contributions from $5 an hour to $9.50 an hour by January 1, 2022.

Nonetheless, the union sees the value of its workers contributing to the 401(k) and has done a remarkable job, as the annuity has $2.4 billion in assets and the 401(k) $1.1 billion. Fifty-four percent of the union workers participate in the 401(k), deferring an average of 7.18% of their salary, says Una Morabito, head of client management for the Workplace Solutions Unit at MassMutual, the plan’s recordkeeper, based in Enfield, Connecticut. Participation has risen considerably from 34% in 2013 and continues to be a focus of the union, Morabito says.

The 401(k) is a multi-employer plan, with the workers represented by 71 local unions throughout the United States. Due to the regulatory complexities related to the need to carefully monitor the 650 employers, it is not feasible for the Board of Trustees to automatically enroll employees into the 401(k) plan, notes Larry McGann, the board’s chairman. Some of these employers are Fortune 500 companies and others are quite small, adds John McIntire, legal counsel to the union. “Because of the diversity of these employers, automatic enrollment with oversight by the Internal Revenue Service is not an option for this plan,” McIntire says. “It would be too burdensome from an administrative standpoint.”

This is why, seven years ago, the IUEC union, MassMutual and the trustees, five of whom are members of the union and five of whom are members of the employers, decided to focus on educating the elevator workers about the benefits of their 401(k) plan, McIntire says.

What makes the 54% participation rate even more remarkable is that every time union members work on a project—typically working on several projects in a single year—they join a new employer and must reenroll in the 401(k). “The new administration for the elevator constructors made participation in the 401(k) a top priority,” McGann says. “The education process is what has driven this number up.”

The plan uses email, print, virtual webinars and onsite meetings at the local union halls to encourage members to maximize their retirement benefit, McGann says. MassMutual works closely with the union to obtain worker data in order to encourage the workers to become participants in the plan, Morabito says. “Once we have demographic data for all of these folks—their name, date of birth, where they live, their salary—this allows us to paint a picture of their true retirement readiness and may reveal they need to save more outside of their annuity in order to retire,” she says.

McGann adds: “The objective under the new leadership was to reach a 50% participation rate, and it is now 53%. The ultimate goal is to have 100% of the workers participating in the plan.”

McIntire also notes: “There has been a concerted effort by the IUEC and MassMutual to encourage the workers to put more money into the 401(k) by visiting every one of the 71 local unions in every state in the country over the past five years. This is possibly the largest multi-employer plan in the nation. To reach a 53% participation rate “without automatic enrollment and the re-enrollment challenge “is really an amazing success story.”

Morabito agrees: “I cannot express how critical the onsite education is. Even as the workers move from one employer to another, we are a constant they can find at their local union office. This education has been part of our success.”

Because the 18- to 29-year-old demographic group has the lowest participation rate, the plan’s goal for 2019 is to target that age group “to get them engaged in their own financial wellness,” Morabito says. —Lee Barney
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