IMT Insurance

Like many other plan sponsors in recent years, personal and commercial insurer IMT Insurance, of West Des Moines, Iowa, froze its defined benefit plan and switched solely to a defined contribution plan. The company placed a soft freeze on the DB plan on June 1, 2015. Employees hired on or after that date would not participate in the DB plan, while employees hired before that date would continue to accrue pension benefits.

According to Marsha Aldridge, IMT vice president, shared services, the company’s senior leadership recognized that a DB freeze could lead to a “haves” vs. “have-nots” division between DB participants and nonparticipants. In response, IMT installed a 3% qualified nonelective contribution plus a possible additional 2% discretionary contribution based on achieving profitability goals for all participants, new hires included.

As of early this year, DB plan participants comprised roughly half the employee population, says Aldridge, and DB participation status has not been an issue. “The individuals we have hired have been very accepting of the fact that that was a benefit offered prior to their coming to IMT,” she notes. “We have a very solid culture that does not focus on the difference.”

After implementing the soft freeze, IMT recognized the challenge of helping all employees, particularly those with no opportunity to receive a pension, prepare for retirement. The company teamed with Qualified Plan Advisors, of Overland Park, Kansas, to develop targeted employee education sessions for both DB participants and nonparticipants. The educational sessions are customized for the employee’s stage of life and savings needs.

A recent focus on employee education centers on “age banding.” The idea for age-banded groups came from brainstorming with QPA, as IMT emerged from the pension plan’s soft freeze, according to Dana Lee, human resources compensation and benefits analyst at IMT. “We wanted to better support and target information relevant for each group of employees and ensure both DB and non-DB participants are on a path to retirement readiness,” says Lee. “To increase engagement, we wanted to keep the information relevant to everyone in the room. For example, those in their 20s usually were not concerned with Social Security benefits, which were important for employees approaching retirement.”

IMT works closely with Darin Henderson, retirement plan adviser with QPA. Henderson hosts quarterly group-education sessions for new hires at which he discusses the company’s savings plan and also offers follow-up individual meetings with each employee. Meetings were remote during the pandemic and are returning to on-site this year. The sessions explain the plan’s operation, Roth vs. pre-tax contributions, and other retirement planning topics.

QPA also holds annual plan-education meetings for all IMT employees and makes the same offer to schedule an individual session if the worker desires. Additionally, participants who are within five to 10 years of retirement may meet with Henderson for a comprehensive financial planning session, at no cost. Employees’ spouses also may attend. Participants take advantage of both the general and personalized education and planning programs, Aldridge says. “I don’t know the exact percentage, but I can tell you that Darin’s time is booked up 100%, and he is more than willing to meet with people outside of that, as well. A good portion of employees participate at some point during the year.”

The financial education and planning benefits are part of IMT’s comprehensive wellness program. Participating employees receive points toward cash compensation or paid time off. Opportunities to earn points from financial wellness activities include increasing the 401(k) contribution; contributing up to the annual IRS deferral limit; and attending plan education sessions or meeting with Henderson individually. Aldridge had no participation statistics available but said she believes that increasing the deferral percentage and meeting with Henderson are the most popular options in the financial wellness program.

IMT’s approach reflects its genuine concern for employees’ long-term financial well-being, says Aldridge, and she said she trusts that the results, such as the plan’s 98.3% participation rate and 10%-plus average deferral rate, indicate their approach is working. “We offer education to all employees to help them understand the importance of retirement planning, focusing on the different stages of saving,” she says. “I think, because of that and our caring and concern, they understand and invest at a much higher level.”

—Ed McCarthy