TOTAL PLAN ASSETS/PARTICIPANTS: $1.342 billion/15,370 total (9,594 active)
PARTICIPATION RATE: 87.0%
AVERAGE DEFERRAL RATE: 7.1%
DEFAULT DEFERRAL RATE: 6%
EMPLOYER CONTRIBUTION: 100% on first 4%; 2% core contribution
Headquartered in Shelton, Connecticut, Pitney Bowes Inc. (PB) is a global provider of shipping and mailing products, location intelligence, and customer-engagement and customer-information-management solutions.
Like many of the nation’s publically traded large-cap corporations, Pitney Bowes has a long history, in this case stretching back to 1902, when Arthur Pitney patented a “double-locking hand-cranked postage-stamping machine” and worked with his attorney to found Pitney Postal Machine Co.
Times have changed, but the current leadership says it is proud to carry on a rich tradition of innovation, into the digital age. According to Nate Nevas, director of global financial benefits and administration, the firm is pushing hard to make sure the business success of recent decades can be sustained, “and we know this will require a healthy, happy and financially educated work force.”
Early Move Toward Advanced Plan Design
It is clear that Pitney Bowes is committing more than just lip service to the ideal of “serving the employee,” commonly cited by large and small businesses alike. The 401(k) plan in many ways is an archetypical streamlined and progressive defined contribution (DC) plan.
In 2004, the firm adopted automatic enrollment—years prior to the implementation of the Pension Protection Act of 2006 (PPA). More recently, Nevas says, the company doubled down and enhanced the auto-enrollment feature by implementing an increased default deferral rate of 6%, tying this to an automatic deferral escalation feature.
In addition to the company match of 100% on deferrals up to 4% of salary, PB provides a year-end true-up contribution and a 2% contribution to all employees after one year of service, regardless of their elective deferrals into the 401(k) plan.
“The message to employees is that it is crucial to save early and save as much as possible,” Nevas notes.
With this, Pitney Bowes developed a website, pbprojectliving.com, to communicate about all benefits—retirement and health care—to current and prospective employees and their families. Nevas is especially proud that the website is publically viewable and uses Google Translate, allowing users to interact with the retirement/health plans in Arabic, English, French, German, Spanish, Thai or Vietnamese.
Beyond these features, Pitney Bowes offers Ernst & Young financial planning services at no cost to all employees to help with their one-on-one financial planning needs. “Our overall wellness program views emotional, physical and financial wellness as interconnected pieces that impact employees and their productivity if not properly maintained,” Nevas says.
Serving a Complex Employee Base
Some of the company’s success is thanks to the partnership the PB retirement plan has formed with its administrator, T. Rowe Price, particularly with Do Kim, a vice president and senior relationship manager. Alongside Kim and Nevas work a number of other benefits professionals, including Pitney Bowes employees Andrew Gold, vice president, total rewards and human resources (HR) business partner, global innovation, and Amy Goldberg, vice president, global treasury planning.
One recent achievement came out of the long-term commitment the plan has made to auto-enroll even those who are lower on the pay scale. As the lesser-paid employees have directed more into the retirement plan, aided by the 4% match and the 2% automatic contribution, this has allowed highly compensated employees (HCEs) to gain more control and flexibility in their own savings efforts.
“Effective beginning January 1, 2016, the HCE contribution limits were raised from 10% pre-tax/Roth and 3% after-tax to 12% and 7%, respectively, a direct result of improved participation and savings rates of the rank and file through auto-enrollment and auto-escalation,” Nevas observes. “This is one of the real success stories to come out of our partnership with T. Rowe Price, which has been developing since 2004. We have seen strong benefits up and down the pay scale.”
Kim insists that the PB executives are modest about their outstanding retirement program, stressing that “Pitney Bowes has taken the point of view of being very open to ideas and suggestions that we have brought, … and they bring to the table in a frank way their own objectives and challenges. They bring us new situations and ideas that push our business forward, too.”
Case in point, the Pitney Bowes retirement plan committee is proud of the retirement income manager tool recently implemented to help participants visualize their post-retirement income picture in a clear and compelling way. Working with Kim, the PB benefits team was among the first of T. Rowe Price Retirement Plan Services’ clients to adopt the tool.
Kim further observes that Nevas and the PB retirement plan team have pushed T. Rowe Price to consider expanding its capabilities in terms of student loan repayment assistance programs. “They want to know: What can T. Rowe do here? They are constantly pushing us to come up with the latest and greatest offerings.”
Kim commends Pitney Bowes for crafting a plan that serves highly compensated and lower-compensation employees fairly and generously. “The plan is so clearly communicated that it is actually used as a recruiting tool,” he observes. “Through the stand-alone website, even prospective employees can understand what benefit offerings are available at the company. We also see this as unique because the amount of data the firm can source from this is just tremendous. It offers us a chance to do highly targeted and responsive communication campaigns.”
Commitment Across Business Units
A key challenge Nevas and his colleagues faced when installing the features that have contributed to the plan’s success is that PB is structured around different business units, each with its own objectives and approaches.
In 2014, when the latest round of plan design changes were being considered, “[the] retirement plan committee had to illustrate the financial impact of everything we wanted to do and then demonstrate the overall benefits of the new plan design to each of its business units as stakeholders,” Nevas explains. “This was a big challenge, especially as the company’s overall business strategy was changing, and we were in the midst of a major corporate action, spinning off a business unit,” he says.
Armed with robust plan data and the backup analysis from T. Rowe Price, each of the business units was won over in turn. “Once the business units recognized the importance of retirement readiness and their responsibility of ensuring participants were saving appropriately, they were fully on board and supported the changes,” Nevas concludes. “Today we have a fully robust and generous retirement package that serves to recruit, retain and reward top talent.” —John Manganaro
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