Corporate 401(k) $25MM–$50MM

The Mentholatum Company

Janice Kwarta
Director of Human Resources
  • Plan(s)
    401(k); frozen DB
  • Total Plan Assets
    $37.7MM in 401(k) plan
  • Number of Participants
    236 in 401(k) plan
  • Participation Rate
  • Average Deferral Rate
  • Default Deferral Rate
  • Default Investment
    American Funds Target Date Retirement Funds
  • Automatic Enrollment
  • Automatic Escalation
  • Employer Contribution
    5% safe harbor match + 1% qualified nonelective contribution (QNEC) + discretionary contribution of 1% – 2%
  • Provider(s)
    Recordkeeper: John Hancock; Adviser: D’Aiutolo Malcolm & Associates Investment Consulting Group, of UBS
  • Financial Wellness Educator

The Mentholatum Company, a manufacturer of nonprescription drug and health care products, headquartered in Orchard Park, New York, successfully replaced its closed and frozen defined benefit (DB) plan with its 401(k) defined contribution (DC) plan.

Freezing the DB plan for further benefit accruals, in 2015, was a difficult decision for the company, says Janice Kwarta, director, human resources (HR) at The Mentholatum Company. Today, the plan has $34.5 million in assets and 120 participants. The committee understood the value of providing retirement security to all of its employees, however, not just those able to supplement their DC savings with a pension.

Through the guidance of the institutional investment team from D’Aiutolo Malcolm & Associates Investment Consulting Group, the company strengthened its 401(k) plan to compensate for the DB plan closure. The 401(k) now has a 5% safe harbor match, a 1% qualified nonelective contribution (QNEC), plus a discretionary contribution of 1% to 2%. With participants deferring an average of 11.6%, they save about 19% a year toward retirement.

This has resulted in some significant outcomes, says Paul D’Aiutolo, senior vice president, wealth management at D’Aiutolo Malcolm. Because of the client’s automatic enrollment at 6%, annual escalations of 1% up to 10%, re-enrollment and generous match, 81% of participants are on track to replace 70% of their income at a normal retirement date of 65. This metric is 68% higher than recordkeeper John Hancock’s total book of business and 42% greater than its clients that are the company’s industry peers. One hundred percent of participants in their 20s, 30s and 40s are on track to be retirement ready—and almost 60% of all participants will be able to replace 90% or more of their income in retirement.

“The company feels really good about getting to this place,” D’Aiutolo says. “It knows all of its employees and wants their 401(k) experience to be like a defined benefit experience. Getting the majority of its employees to these high-income replacement ratios was a key goal for this client, and we helped it make the decisions to achieve that. What they’ve accomplished is at the pinnacle of our client base.”

As Kwarta puts it, “Working past 65 should be a choice—not a requirement. We have a strong role to play in that.”

Kwarta credits her HR team as a major reason for the plan’s 97.6% participation rate. “[Team members] sit down, thoughtfully, with people when they’re ready to enroll in the plan to help them understand it, the match contributions and why participating is so important,” she says.

According to Kwarta, the plan has made it a point to adopt best practices of the most successful retirement plans. “We also conduct annual, mandatory retirement education sessions to ensure that participants understand the plan, its importance to their financial security and to set financial goals,” she says.

The company changed recordkeepers in 2018 to improve administration services and investment options. With its prior recordkeeper, investments were limited to pooled separate accounts. The plan now has investment-grade mutual funds with revenue sharing that goes back to the plan to reduce administrative costs and to share with the participants. This structure also lets the plan have more options available if investment changes are needed.

Aided by John Hancock and UBS, The Mentholatum Company also keeps working to develop innovative ways to teach participants about their plan, through such vehicles as webinars, in-person education sessions and outreach via email, posters and mailers. “Our 401(k) plan is now a meaningful benefit to employee financial security, as well as a recruitment and retention tool,” Kwarta says. 

Lee Barney

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