University of Wisconsin Medical Foundation

The University of Wisconsin Medical Foundation provides an employer retirement contribution—10% of pay for most employees—that it hopes will motivate people to come there to work, and to stay.

The Madison, Wisconsin-based University of Wisconsin Medical Foundation is part of the integrated health system of the University of Wisconsin-Madison, and is the state’s second-largest medical practice group. The UW Medical Foundation has a 401(k)/profit-sharing plan for non-physician employees as well as a 401(a) physician retirement plan for its 1,785 clinical faculty physicians.

“The medical center is a big employer in Madison, and we have close to 18,000 employees,” says Dr. Venkat Rao, chair of the board of trustees for the retirement plans. “We are a big player as an employer in the city, but the citizens do have choices: They can work at plenty of other places. So we want to provide our employees with the best possible situation we can.”

The employer makes a nonelective contribution and a profit-sharing contribution to the 401(k), rather than having a match formula that requires an employee contribution. “We’ve always strived to be a top-choice employer for employees, so we went the way of not using a match formula,” Rao explains. “Employees receive 8% of their paycheck as an employer contribution, and another 2% in a profit-sharing contribution if the organization does well, and we’ve made that contribution every year for at least the past decade. So they receive a total of 10% from the employer.” In cases where an employee takes on additional work outside his normal duties, the employee also gets a 5.7% employer contribution for that extra gross compensation earned.

The UW Medical Foundation fares well in the Retirement Plan Health Score rating from its recordkeeper Fidelity, with a score of 96 out of 100 as of year-end 2021, 22 points higher than employer peers on Fidelity’s platform. The rating is based on a combination of factors: plan design, retirement readiness scores and participant engagement.

Fidelity’s Retirement Plan Health Score shows the UW Medical Foundation 401(k) plan’s 94% participation rate surpassing the 76% average for peers, while its average total (employer plus employee) contribution rate of 18.2% exceeds peers’ 12% average. And 30% of participants engaged with Fidelity in a retirement planning activity in the previous 12 months, compared to 18% of peers’ participants.

“This is a multi-pronged approach to increase engagement,” Rao says. “One reason for the high score is clearly the auto-enrollment in the 401(k) at 6%. So employees have to actively choose not to participate, and I think that’s the primary reason for the high participation. Number two, we communicate with our employees frequently throughout the year about the plan.”

Third, Fidelity has a customer service center in Madison, and participants can schedule a one-on-one meeting to get answers to their questions about the retirement plans, discuss their challenges in saving, and get guidance on how to make plans for their retirement. “They can go over their financial needs and their planning for their retirement,” Rao says. “Employees are able to lay out their financial picture, and receive personalized advice.”

–Judy Ward