2016 PSOY – Wayne Fueling Systems LLC

HEADQUARTERS: Austin, Texas

TOTAL PLAN ASSETS/PARTICIPANTS: $26.3 million/513

PARTICIPATION RATE: 95%

AVERAGE DEFERRAL RATE: 8.4%

DEFAULT DEFERRAL RATE: 6%

DEFAULT INVESTMENT:
Vanguard Target Retirement Funds

EMPLOYER CONTRIBUTION: 100% of first 3%, 50% of next 5%

ADDITIONAL PLANS: Not applicable

When Wayne Fueling Systems LLC (WFS) spun off from GE Energy Services, Inc. in August 2014, the new company had fewer than 70 days to get its 401(k) plan set up and running. On the upside, starting a new plan allowed WFS to utilize current best-practice thinking in plan design, including auto-enrolling all nonparticipating employees at 6%, reenrolling all assets into target-date funds, and auto-escalating participants 1% per year up to 10%.

“We did not have much concern of pushback from employees, since the employees in general have been traditionally interested in the plan—and we already had 88% participation before the spinoff,” says Leslie Bingham, HR Director–North America at the Austin, Texas-based fuel-dispenser equipment manufacturer. “We simply presented how the transition was going to take place to the employees in mandatory transition meetings, and provided an easy opt-out process.”

The sponsor chose The Vanguard Group, Inc. as its recordkeeper, benchmarked Vanguard’s fees with four providers, and found them reasonable. The company implemented a per-participant administrative fee.

“WFS pays a portion of the fee, and the employees pay a portion. Plus, the Vanguard target date funds revenue-shared nine basis points that reduced the participant portion of the fee,” Bingham says. “Consequently, the administrative fee per quarter for employees is low, and did not cause any problems when we explained it to employees.”

The transition to a new plan did have some challenges, however, particularly the employer-contribution decline from a total of 7% to a total of 5.5%. “At GE, the plan had a 3% profit-sharing contribution, plus a 50% match up to 8%,” Bingham says. “We matter-of-factly explained the change in the contribution, to a match of 100% of the first 3%, plus 50% on the next 5%.” WFS made clear that employees had to contribute at least 3% themselves “to get the 3% that they were used to getting whether they participated or not before,” from the GE profit-sharing contribution, she adds.

“We were clear about the change with employees at the transition meetings, and of course, they had some consternation,” Bingham recalls. “However, all in all, they realize the contribution is still above average in the Austin area, where the majority of our employees reside. Internally, we reviewed five or six of our competitor firms in Austin, and found that our 5.5% match bested all of them, including some large, brand-name technology companies with whom we compete for tech employees.”

The WFS plan’s participation rate now stands at 95%, and the sponsor intends to send targeted e-mails to all non-participating employees that discuss the importance of planning for retirement. “We will send this e-mail out to coincide with the upcoming merit pay increase, indicating that they should consider enrolling in the 401(k) and use just their merit-increase amount to begin saving for retirement,” Bingham says. “They will not feel any impact to their paycheck, and their savings will be painless!” 

Judy Ward

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