First PREMIER Bank and PREMIER Bankcard

First Premier Bank and Premier Bankcard, a banking and credit card company in Sioux Falls, South Dakota, is continually improving its plan design and offerings to increase its employees’ retirement readiness.

In 2010, just 18% of plan participants were on track to retain their standard of living in retirement. The plan’s Empower Retirement median lifetime income score is now 94%, having risen from 88% in just the past year. The plan has a 98% participation rate and average deferral rate of 8.6%; 35% of participants save 10% or more.

“One of the big things Premier has done is it has defined success a little differently from the typical employer,” says Brad Arends, CEO and co-founder of Intellicents, Inc., the plan’s adviser. “Many employers define success in the plan by fund performance, low fees, fiduciary governance and decent participation rates. Premier focuses on what percent of employees are on track to retire comfortably.”

All changes to the plan design and resources are based on the goal for every Premier employee to maintain his or her standard of living in retirement, Arends says.

The sponsor upped the default deferral rate from 3% to 5% in 2015, and now 88% of eligible employees save enough to receive the full 5% match; that amount is vested immediately. Last year, the sponsor also raised the automatic escalation cap from 10% to 15%. “That increased the savings level, and we have very few employees who opt out or lower their percentages,” says Colleen Stratton, associate vice president of total rewards for Premier.

More participants were added when the sponsor decided to auto-escalate those who deferred 0%. It discovered that some people who had paused contributions due to a financial setback hadn’t restarted them even when it was financially possible again. While not exactly a full re-enrollment, auto-escalation for participants deferring nothing gets them reinvolved in the plan, says Nick Austin, employee benefits consultant with Intellicents. “Otherwise, it could have been years before they’d have taken that initiative on their own.”

The company invests in several levels of personalized advice for the participants. Managed accounts are now the plan’s default investment. For those who choose a managed account, Premier will pay all of the fees.

“The advice is based on outcomes: How can you get to the goal of maintaining that same standard of living?” Arends says. “The reception has been phenomenal. We auto-enrolled every person into this plan, and they all had the ability to opt out. Only 14 people did that, and over 90% of the participants are getting some form of advice in that plan.”

Up to 12 variables go into formulating advice for the managed accounts, and nine are automatically extracted from the recordkeeper’s data on each participant—e.g., age, wage, location of residence, any loan balance, and whether the individual receives the maximum match. “A person doesn’t have to do a thing, and nine variables are taken into account,” Arends notes. Individuals can then add further data, such as information about other 401(k)s and outside assets, to personalize the recommendations even more.

Premier initiated a financial wellness program last year that provides financial seminars on a wide range of topics and offers comprehensive financial planning services to all employees free of charge. Every month, a campaign highlights a topic related to the 401(k). “We try to keep it top of mind,” Stratton says.

Four years ago, Premier debuted its annual total rewards fairs; there, employees may talk with any of the company’s benefits vendors, including Austin and his staff, who provide financial advice. Besides its services at the fairs, Austin’s team travels to all Premier locations annually and offers one-on-one meetings to review accounts, answer financial questions and sometimes facilitate a deferral increase.

“When Nick and his team come to Sioux Falls, we schedule them, and they’re booked,” Stratton says. “Our employees are really excited. They want to meet with them, and they care enough about retirement that they want the advice.”

—Kimberly Langford