Navy Federal Credit Union

Navy Federal Credit Union offers a variety of plans to meet the needs of all employees, from part-time to full-time and from entry-level to executive.

Robin Hoilman, benefits program manager, says Navy Federal’s traditional defined benefit pension plan was switched to a cash balance plan in 2000. Employees at that time could either choose to stay in the traditional plan or move to the cash balance plan. Employees hired after September 10, 2000, are covered only by the cash balance plan.

Employees in the traditional plan receive a benefit equal to 2% of the average of their highest salary for 36 consecutive months multiplied by their credited years of service. For employees in the cash balance plan, Navy Federal contributes between 3% and 7% of their salary, depending on their years of service, plus an annual interest credit. Employees with accounts in the traditional plan who transitioned to the cash balance plan receive a benefit from both plans.

The DB plan also provides a dependent children’s benefit of $510 a month per child until age 23, if an employee passes away.

A Supplemental Executive Retirement Plan allows highly compensated executives to contribute amounts above the statutory contribution limit allowed in the 401(k). The 457(b) plan allows the same for highly compensated employees, which includes more employees than just the executives covered by the SERP, Hoilman explains.

Since the inception of Navy Federal’s 401(k) plan in 1997, the credit union has allowed part-time employees to participate. “We’re very paternalistic and do take care of employees,” Hoilman says.

Emily Fahim, assistant vice president of benefits, says that employees who work 20 hours or more a week are eligible for all of Navy Federal’s benefits. “One reason for that is that we have part-time branch employees that we wanted to treat the same as full-time employees,” she says.

“I think we’ve always been big on the ‘haves’ and the ‘have nots’ and want to offer something for everyone,” Fahim adds. “We have more than 300 branches in the world. No matter the location or level of employee, we want to treat people the same and offer the same benefits.”

The Total Benefits tool provided by Navy Federal’s recordkeeper, Fidelity Investments, allows employees to see all their benefits in one place. Hoilman says it also includes Social Security benefit estimates.

Fahim says Navy Federal’s internal team offers a Total Rewards statement that shows employees’ DC and DB plan balances, as well as other health and wealth benefits. Employees can see their statement on the company’s Intranet site. “The cool thing is they can use that information along with the Fidelity planning tool,” she says.

Navy Federal Credit Union also holds a seminar once a year to talk about Social Security and Medicare, says Fahim.

The credit union also offers specific investments to help employees create lifetime income. Alfred Charette, AVP of retirement investments, says in October, the Fidelity Managed Retirement Funds with the Fidelity Managed Cash Flow Strategy were added to the 401(k) plan’s investment lineup. The Managed Cash Flow Strategy calculates what participants can withdraw while still minimizing the risk of outliving their assets. “We want to make sure decumulation outcomes are optimized for participants,” he says. “We try to make sure employees who keep their money in the plan after retirement are getting the most efficient outcome.”

Charette explains that the Fidelity offering is similar to “regular” TDFs with different allocations. “Our thinking in selecting the product was that our retirees need something to prevent them from potentially taking too much in distributions relative to zero earning power,” he says. “The post-retirement 2025 fund, for example, has a larger allocation to shorter duration assets and the type of investments in each asset category are more defensive relative to a regular 2025 TDF.” There are a couple hundred participants invested in these products.

Charette says the offering not only helps retirees invest in the best way but encourages them to keep their money in the 401(k) plan. “This gives the plan future purchasing power, and that lowers fees for participants, so it’s not only good for retired participants but for all participants,” he says.

—Rebecca Moore