HEADQUARTERS: Greencastle, Indiana
TOTAL PLAN ASSET/PARTICIPANTS: Approx. $150 million / 597
PARTICIPATION RATE: 94%
AVG. DEFERRAL RATE: Nearly 9%
DEFAULT DEFERRAL RATE: N/A
DEFAULT INVESTMENT: J.P. Morgan Chase TDFs
EMPLOYER CONTRIBUTION: 8% match with deferral of 5%
ADDITIONAL RETIREMENT PLANS: 457(b)
As of November 2014, the DePauw 403(b) plan was consolidated from four recordkeepers to one, and the number of investment options was reduced from more than 400 to 26, including a target-date fund (TDF) series. Amy Haug, director of human resources at DePauw says the university solicited input about investment options from its economics department, which advocated the behavioral finance position that less is more.
Communication to employees about the consolidation process began in early 2014. The recordkeeper, TIAA, mailed and emailed a transition guide to all employees explaining the consolidation, overviewing changes in investment options and introducing TDFs as the qualified default investment alternative (QDIA) for employees that did not make an investment election. Kevin Murray, the plan’s adviser from Cammack Retirement Group in Wellesley, Massachusetts, says this made things easier for participants. “There were no longer four books about enrolling in the plan; it is now the DePauw plan,” he says.
According to Haug, the consolidation and extensive communication led to a participation rate increase of 12%, from 82% prior to the consolidation to 94% now. In addition, 164 employees increased their salary deferrals.
DePauw also offers a very generous employer contribution: if employees defer 5% of their salaries into the plan, DePauw puts in 8% of their salaries. According to Haug, in the market of higher education, the 8% match with 5% deferral would be considered “competitive” in terms of level of benefit. She adds that “our intent was to provide motivation for those ‘on the fence’ about participating and how much to contribute.”
One would think that with such a generous match, employees would only defer 5% to the plan, but Haug says employees seem to have embraced Retirement Readiness planning and as such, participate at an average deferral of 9%. She attributes this to the strong presence of TIAA on campus. TIAA dedicates time on a semi-monthly basis to have a Retirement Advisor on campus to meet with participants. “DePauw is fortunate to have had the same TIAA Retirement Advisor for several years, and he is well-received by employees and has established very positive relationships. He is also a DePauw alum,” Haug says.
The TIAA Retirement Advisor worked with DePauw Human Resources to set up an online scheduling system for employees to reserve retirement readiness counseling sessions, and the schedule is always full, she adds. “The partnership between TIAA and DePauw has made it simple and easy for employees to access TIAA education and advising support; in-person, online and over the phone,” Haug says.
According to Haug, the consolidation resulted in more than $80,000 in reduced fees, more administrative ease and less confusion for employees. In addition, DePauw established a retirement plan oversight committee, an investment policy statement and implemented fiduciary training.
“Instead of spending time on administration, we can talk to TIAA about plan design and retirement readiness, and spend time educating and enrolling participants,” Haug says. DePauw receives retirement readiness reports from TIAA and sends messages to employees based on different categories of readiness. She adds that DePauw is now better able to leverage education from a single recordkeeper to help participants make better decisions. —Rebecca Moore
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