Catholic Charities of Maryland

Catholic Charities of Maryland, with offices in Baltimore, helps hundreds of thousands of Marylanders in need, including children and families, immigrants, individuals with intellectual disabilities, people living in poverty, and older adults. “We know our success in helping those in need is due to the dedication of our employees. However, we recognized that our employees are so focused on others that they sometimes forget to take care of themselves and their future,” says Karen Funk, benefits and human resource service center manager at Catholic Charities. “We wanted to help them plan for retirement.”

To accomplish this, Catholic Charities added automatic enrollment, at 2%, for employees hired after October 2016. This increased participation, but there were still many employees not contributing to the plan. Last year, the retirement committee began discussing ways to increase participation and to include noncontributing employees hired before October 2016 or those who later opted out, as well as non-benefit eligible employees. T. Rowe Price suggested a retro-enrollment model, which the agency implemented last July, sweeping in all noncontributing participants at 2%.

Catholic Charities didn’t stop there. “We understand that complacency acts as an opponent to deferred contributions,” Funk says. “Once the initial deferral begins, employees rarely make changes or even look at their account again.” For that reason, it made the decision to implement an automatic increase feature to the plan, also as of last July. For employees deferring between 1% and 3%, their deferral rate has begun to increase in 1% increments every July to a maximum of 4%.

But Catholic Charities still worried that, given employees’ financial constraints, they might not support the move to auto-enrollment and auto-increase. “Communication was key,” Funk says. The sponsor mailed letters to employees, made sure managers understood the upcoming changes, and added information to the agency intranet.

“This is not a very highly paid population, so we wanted to create a mechanism, through plan design, that wouldn’t create an undue hardship for them,” says Jeremy McCurdy, an account manager at T. Rowe Price, Catholic Charities’ recordkeeper.

Participation rates increased from 67.6% in December 2022 to 95.4% by the end of December 2023. “Hardly anyone opted out,” Funk says. “We’re very pleased with the results. It was a great experience, and we won’t stop there.”

The committee is already thinking about next steps to move deferral rates even higher, Funk says. Going forward, the organization will likely increase the auto-enrollment deferral rate and auto-increase maximum incrementally, over time, she says.

Catholic Charities contributes 4% of eligible annual earnings for benefit-eligible employees, regardless of whether they participate in the plan. In addition, the agency made other improvements to their plan last July, such as streamlining hardship withdrawals and the automatic cash-out feature—i.e., if employees don’t provide direction, cash-outs of less than $5,000 now go into an individual retirement account rather than the employee being given a check.

To further educate its employees, Catholic Charities had T. Rowe Price host multiple education sessions early this year, explaining the new features and available plans, offering participants tips on how to make the most of their retirement benefits, and demonstrating the online account features available to them.

The organization experienced so much success with its plan that it has become an inspiration to others in the Baltimore area. After seeing that success, last year another nonprofit followed suit, implementing auto-enrollment.

The key to the success of Catholic Charities’ plan, McCurdy says, is its simplicity.

“It’s great to have all the bells and whistles, but only if you use them,” he says. “[The organization] did a really nice job of being mindful and methodical about how it implemented these solutions from a plan design perspective that would have an impact on its macro population.”

—Beth Braverman