Sacramento Credit Union

Serving the Sacramento, California, area, and with roots tracing back to 1935, Sacramento Credit Union is a member-owned, not-for-profit financial services institution that is devoted to providing “top-tier” employee retirement benefits, the organization says.

The retirement plan committee is focused on the well-being of employees and strives to provide the best possible financial outcome for each participant, says Aletha Hickey, vice president of human resources at Sacramento Credit Union. The executive team takes an active interest in preparing employees for retirement by meeting quarterly to review the organization’s benefits and look for opportunities to enhance its 401(k) profit-sharing plan.

When it comes to plan governance, Aimee Hendershott, relationship manager at Principal Financial Group, says SCU is one of her top clients and a true industry leader. The plan has had a consistent structure since the 1990s, with quarterly meetings, full committee attendance and substantial engaged oversight.

The sponsor quickly takes advantage of any opportunity that new legislation provides to update its benefit offerings, Hendershott says. It uses plan design and consistent messaging to set employees up to achieve retirement readiness—to make it easier for them to succeed than to fail, she says.

“We’ve changed our focus to really address employees’ feelings about what’s going on,” Hendershott says, alluding to the COVID-19 pandemic. Participant education includes financial wellness challenges provided by the organization’s wellness coordinator.  But it also focuses on the emotional impact caused by crises such as the pandemic, how that can affect how the participants feel about saving long-term, and how they can manage their uncertainty. “We understand that things will happen in the short term, such as market volatility, but that doesn’t change your long-term goal,” Hendershott says. “Aletha, the plan’s adviser, and Principal have all worked together to make sure we’re coordinating our messaging.”

Besides reaching out to employees to ensure they receive the education, advice and financial planning instruction that SCU offers, Hickey personally contacts any employee not enrolled in the retirement plan.

“I’d say this is something that’s near and dear to my heart,” she says of reaching out to the employees. She will tell them the importance of long-term saving and how both the company match—50% of 6%—plus the 5% discretionary contributions can add up. Her proactive outreach has improved plan engagement, especially among those who have failed to re-enroll after something unexpected made them stop contributing.

“It’s life. Expenses happen, and it’s that positive connection with them that gets them back on track,” she adds. “I do it every year and just keep the retirement plan in front of their face.”

Choosing a default deferral rate of 6% wasn’t easy, as the pandemic and inflation have made it harder for people to make ends meet, Hickey says. In the end, the credit union concluded that, if it were left up to the employees, many would never enroll. If 6% is too much for someone, they can take action to lower their deferral.

“I’ve seen this strategy work firsthand, and I wouldn’t do it any other way,” Hickey says. “We help to shape their behavior, or their mindset, about what they can actually afford to save and invest.”

Along with automatic enrollment, Hendershott says, the plan offers a qualified default investment alternative that puts employees into an age-appropriate target-date fund. SCU has been sensitive to employee needs, she adds, which is what has helped it attain its 95% participation rate.

“Even if they never actively participate, they’re still going to be enrolled in the right portfolio and put on the path of automatic escalation. Years go by, and they suddenly have way more money than they thought,” Hendershott observes.

She says the plan is ultimately successful because everyone shares in a common goal.

“The ongoing education is huge. Support from the entire organization is huge, and I think it has developed a powerful culture of saving,” she concludes. 

—DJ Shaw