MITRE

MITRE, a not-for-profit with dual headquarters in McLean, Virginia, and Bedford, Massachusetts, seeks to solve major public interest problems for its government customers—such as the U.S. Department of Defense and the Centers for Medicare & Medicaid Services—through its federally funded research and development centers and public-private partnerships. To do that, it needs to recruit and retain staff with a lot of scientific and high-tech expertise, among other qualifications.

“Our strategy is to emphasize the retirement benefit. Our core [employer] contribution is a shining star of our benefits program,” says Phil Abrams, director of total rewards and well-being. “We’re a not-for-profit, so we don’t have equity or large bonuses to offer to people.”

MITRE benchmarks its retirement benefit to make sure it’s competitive with not only other nonprofit researchers, but also the corporate employers it competes with for staff. “We offer a significant amount of high-tech-focused services to our [customers],” Abrams says. “So we need to compete not just with traditional nonprofits: We need to compete with the tech companies.”

The MITRE retirement benefit has three contribution levels. “MITRE’s retirement plans are designed to support employee retention,” says Christina Orfanos, vice president of people experience and strategy.

The first contribution level includes a mandatory employee contribution. Employees must contribute to the 403(b) plan 2% of their base salary up to the Social Security Wage Base (currently $147,000) and 4.7% of their base salary over the SSWB. In return, MITRE provides a contribution to the 401(a) plan of 7.5% of that employee’s base salary up to the SSWB, plus 10.5% of her base salary over that.

On the second level, for voluntary employee contributions to the 403(b) plan, a participant can contribute up to 10% of his base salary up to the SSWB, and up to 6% of base salary over that. In return, the company matches 25% of the participant’s level two contribution. On the third level, a 403(b) participant can contribute up to the IRS annual contribution limit, and MITRE does not match that.

Asked how MITRE justifies the significant expense of the employer contribution, Abrams responds, “It is a primary driver of recruiting and retention for us. Our employees have an average service of 10 years with us, which is well above industry norms. A lot of employees start and end their careers at MITRE, and we think the retirement benefit is a big part of that.”

MITRE defines success for its retirement savings program by looking at the projected income replacement ratios for its employees. Historically, the projected income replacement ratio for employees who have been at MITRE for at least 25 years averages 70%. “A lot of people retire here after 15 to 30 years of service with us,” Abrams says. “If they can reach 60% to 100% income replacement, depending on their length of service with us, that’s a really good outcome, because they can include Social Security on top of that.”

–Judy Ward