PARTICIPATION RATE: 98%
AVERAGE DEFERRAL RATE: 11.68%
AUTOMATIC ENROLLMENT: No
AUTOMATIC ESCALATION: No
EMPLOYER CONTRIBUTION: 100% match on the first 5%, plus 6% employer contribution
There are many impressive stats that describe the 401(k) plan of Great River Energy, an electric cooperative headquartered in Maple Grove, Minnesota, that transmits electricity in that state and Wisconsin. But one figure in particular is downright eye-popping: The participation rate in the plan is 98%, despite the fact that the company has not instituted automatic enrollment.
How is that possible? Kandace Olsen, vice president and chief culture officer for Great River, points to a couple of different causes for the stellar, non-automated participation level.
“First of all, our employees have always been good savers, believe it or not. I think it has a lot to do with the culture and the nature of the industry we are in,” she says. “Being a utility, we have many workers who have a lot of longevity working for us and in their respective roles. They know they have to invest themselves in the benefits in order to build a bright future. And, of course, we do also communicate a lot with the employees about maximizing use of the benefits offerings.”
On the very first day a new employee starts working for Great River, he meets with human resources (HR) personnel and is told specifically about enrolling in all the different benefits the company offers.
“We discuss the 401(k) retirement plan on day one, as part of this,” Olsen notes. “It also helps when we tell them we are going to be putting 6% of their earnings into the plan every year as a contribution—and that, in addition, they can get a match of 100% of the first 5% they contribute. So it’s a generous benefit, combined, and our people are made to understand that if they don’t participate fully, they are leaving money on the table.”
The company goes so far as to break this information down and show new employees what they would miss out on, in dollar figures. In the end, it resonates with people, and once they are enrolled, the design of the plan helps them achieve very strong results over time. The average deferral rate is an impressive 11.5%, with an average account balance around $375,000.
Plan officials have achieved this success, they say, by constantly communicating with participants about the integrity and high standards of the plan, and by demonstrating that the company is dedicated to retirement education and communication for all participants. Among the many strategies implemented by the plan committee—in partnership with the recordkeeper, Fidelity Investments, and the adviser, CAPTRUST—are interactive learning modules; personal financial worksheets combined with individual meetings with a financial consultant; on-site informational sessions led by a public affairs specialist from the Social Security Administration (SSA); periodic targeted webinars and educational sessions; and structured encouragement of employees to review beneficiary designations on at least an annual basis.
“Together these efforts make auto-enrollment unnecessary,” Olsen concludes. “Something else to point out is that we push people to feel accountable for their own retirement and to be engaged in their health and well-being. We give them all the resources and education they need—but they understand it’s up to them to take advantage of the offerings. This is baked into our culture of encouraging people to take pride in their work and to be accountable for their work.” —John Manganaro
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