Nonprofit DC <$500MM

Cobleskill Regional Hospital

Plansponsor of the year winner icon WINNER
Christine Pirri
Vice President, Nonclinical Operations
  • Plan(s)
  • Total Plan Assets
  • Number of Participants
  • Participation Rate
  • Average Deferral Rate
  • Default Deferral Rate
  • Default Investment
    TIAA-CREF Lifecycle Index Funds
  • Automatic Enrollment
  • Automatic Escalation
  • Employer Contribution
    3% nonelective contribution
  • Provider(s)
    Recordkeeper, TIAA; Adviser, HANYS Benefit Services
  • Financial Wellness Educator(s)
    TIAA, HANYS Benefit Services

“We frame it as, ‘You go to the doctor once a year for your annual wellness checkup for your physical health. This is your annual wellness checkup for your financial health.’”

A focus on employees’ wellness comes naturally at Cobleskill Regional Hospital. This goes beyond physical wellness and influences the 403(b) plan’s design and approach to educating employees. “Retirement readiness and financial wellness are woven into the fabric of our culture,” says Christine Pirri, vice president, nonclinical operations.

Design and fee changes

On the plan design front, Cobleskill’s 403(b) added automatic enrollment and automatic escalation last year. The plan has 93% participation now, despite the fact that many of the hospital’s employees work in areas such as housekeeping and food service. “Many employees are low-wage earners,” Human Resources (HR) Manager Carol Spaulding says. “Forty-three percent of our employees make less than $25 an hour.”

As a small rural facility in upstate New York, Cobleskill, named for the town where it’s located, has limited operational and financial resources to devote to its 403(b) retirement plan. But, in the past several years, the sponsor has learned to make the most of what it has available.

Momentum for plan improvements started building when Pirri joined the hospital, six years ago. “I have been involved in managing retirement plans for 15 years,” she says. “I want people, when they are ready to retire, to have that option. And, from a business perspective, if an employee wants to retire and can’t, that’s not a good position for the employee or the employer.”

The sponsor decided to implement a 3% default deferral rate. “We went with 3% in an effort to keep it substantial enough for participants to begin to really save some money, but low enough that it doesn’t take so much from their paycheck that it will cause them to stop contributing,” Pirri says. “It was very deliberate on our part to pick that ‘sweet spot.’”

“With the low initial auto-enroll rate and 1% auto-increase, we tell them, ‘You’re not really going to notice it coming out of your paycheck,’” Spaulding says. Sometimes she’ll sit with an employee and use software to model the effect of a deferral increase.

Cobleskill also plans to do a re-enrollment of nonparticipants every January 1, Pirri says. “For those who opted out, they’ve shared with us their personal reasons,” she says. “I believe those reasons will change in the following years, but I don’t think people think to go back in and enroll in the retirement plan.”

The plan-design changes came after the plan moved to “affiliate pricing” for its recordkeeping and investments in 2018. “We’re a smaller hospital, licensed for 26 beds, and we have about 230 employees. But we are part of a five-hospital network,” Pirri says. Plan recordkeeper TIAA also works with a much larger hospital in the system, and Cobleskill negotiated for the same investments and fees as the larger plan has. “We are now able to take advantage of that lower pricing for our $8 million plan, as if we’re the $500 million plan,” she says. The investment menu mirrors the lineup of the larger hospital, with about 20 current options.

Cobleskill’s 403(b) also moved to a flat, per-participant administrative fee. “So everybody pays the same amount, whatever their balance,” Pirri says. “And we use the lowest-cost share class available, in most cases institutional shares with zero revenue sharing.”

The participant education approach

To help motivate new employees to not opt out, when they are auto-enrolled, they are required to meet in person with a TIAA staff member. Those meetings usually run 30 minutes to an hour, Spaulding says. “The employees sometimes bring their spouse or significant other to the meeting and bring information on their other retirement accounts,” she says. “They get to talk about things such as ‘Based on my age, where should I be with my retirement savings?’”

Employees also are strongly encouraged to meet each year with plan adviser HANYS Benefit Services (HBS) to do an “annual financial wellness checkup.” As Pirri explains, “We frame it as, ‘You go to the doctor once a year for your annual wellness checkup for your physical health. This is your annual wellness checkup for your financial health.’”

“It gets people thinking about it,” Pirri says of the meetings. “Generally speaking, our employees are a little nervous when it comes to talking about their retirement. It’s a little overwhelming. My philosophy is, if we keep exposing them to it, it becomes less scary.”

While the meetings are temporarily being done virtually, HBS typically goes on-site to the hospital twice a month. “We’re there for the day, and employees can sign up for a half-hour appointment,” says Carol Idone, vice president, consulting at the firm, in Rensselaer, New York. Since the meetings started, a year ago April, HBS has met with 97 Cobleskill employees, or over 40% of the staff.

Idone attributes much of the success in convincing Cobleskill employees to attend a meeting to Pirri, who will walk the hospital’s halls talking to employees and encouraging those who have yet to schedule a meeting this year to do so. “She’s a little spitfire,” Idone says admiringly.

The meetings start with a formatted, retirement-focused component where HBS covers retirement basics such as the participant’s current deferral rate and investment allocations. Then the employee gets an open time to ask about his specific financial issues, such as how to build an emergency savings fund, Idone says. “The meetings are focused on the plan, but [the employee’s] questions and concerns about his overall financial well-being come into play.

“The biggest question they have in the meetings is, when will they have enough to retire?” she continues. It’s still common for employees at Cobleskill, and elsewhere, to think they have a defined benefit (DB)-style plan that will give them a guaranteed income in retirement, so HBS will explain how a defined contribution (DC) plan gives an employee the ultimate responsibility for his own retirement outcome. “Once people get that message, they’re much more interested in understanding, ‘How can I make this work?’” she says. Cobleskill employees’ most common follow-up after a meeting is to opt in to the auto-escalation feature. “They realize that a 3% [default] contribution is greater than zero, but it’s not going to do it for them in the long term.”

Spaulding says having the financial wellness meetings during working hours helps Cobleskill convey its values to new employees. “It’s important for us to grab folks when they first become part of the organization and make clear that their financial wellness is important to our organization,” she says. “This tells them, it’s OK to take this time to talk to someone about this.” —Judy Ward

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