Boston Medical Center (BMC), a nonprofit teaching hospital in the Massachusetts capital, understands that participants need financial and investment education or advice as they save for retirement, then enter that phase of life.
“Our retirement plan is just one component of our retirement participant success strategy,” says Kerry Ryan, BMC’s director of employee benefits. “We recognize that retirement planning is a career-long process and consider a successful retirement to be more than an employee just having a retirement plan account balance.”
The hospital developed a retirement readiness resource guide and accompanying video that supports its efforts to help its staff save, providing an action plan that shows them, step by step, what to do in each stage of their career, to prepare financially for retirement.
Besides automatic enrollment in the core 403(b) plan at a 3% deferral rate and automatic escalation of deferrals of 1% per year up to 15%, BMC employees are offered an array of services that address their unique financial needs. “We want to help them maximize their earnings so they will have money to invest toward retirement,” Ryan says.
For example, BMC partners with Laurel Road, an online lending service that consolidates and refinances student loans. For resident physicians, the company takes into account future income to improve their credit rating.
In addition, BMC partners with the Massachusetts Affordable Housing Alliance (MAHA), which offers a first-time home-buying program. Boston Home Center, a division of the mayor’s office, educates employees about all available mortgage programs and helps them strategize how to get a good rate and qualify for a lower down-payment. A nonprofit group helps employees improve their credit score.
“We feel, if employees can get these things right, they are well on their way to a successful financial future,” Ryan says.
Much More Than ‘Good-bye’
But BMC does not just say goodbye when employees retire. For starters, near-retirees are invited to a series of seminars offered each fall where experts discuss Social Security and Medicare and how to turn participant savings into a retirement income stream. The medical center’s 403(b) plan recordkeeper, TIAA, also offers participants one-on-ones with advisers.
BMC held a five-week retirement readiness campaign, with seminars and a booklet noting steps to take in retirement. Topics included what retirees can do with their time, including socially, plus how to replace medical insurance, how Social Security works and when to start taking it.
Further, retirees are told they can access the same resources that active participants can. For instance, they are still eligible to receive distribution and investment advice on-site or over the phone.
BMC encourages employees to keep their money in the plan. “Most assume they have to roll their money out, but it’s best not to do that, for cost savings and professional management of investments,” Ryan says, adding that, among participants who terminated last year, 94% kept their assets in the plan.
A social worker in the benefits department helps employees with challenges such as job stress or family problems. Retirees may continue to use this service if they want help adjusting to their new lifestyle or with other issues.
“We have the mindset that every participant is unique, and we try to address each one’s needs,” Ryan says.
She observes that hospital staff, besides being in a wide range of job roles, is at varying levels of education, financial literacy and age. This is why the university uses very targeted education based on where employees are in their careers and how close they are to retirement. “We don’t believe people receive information the same way or have the ability to understand in the same way,” Ryan says. “For example, we provide education to nurses in a different way than to service staff.”
Moreover, not all employees have the luxury of taking time from their job responsibilities to attend group meetings or lunch-and-learns, so BMC offers what it calls “huddles,” for which it goes to different hospital floors or departments and has a 10- to 15-minute discussion targeting a specific topic.
Besides the resource guide on retirement readiness, BMC offers a series on topics such as home buying and saving for a child’s education. Each month, a different theme is rolled out on the hospital’s intranet or in the departments. Guides may be available on a table outside the cafeteria or at a BMC benefits fair; managers may receive them to pass on to employees. “They are bite-sized pieces, so employees don’t feel overwhelmed,” Ryan says.
Brad Cote, relationship manager at TIAA, points to other benefit offerings including special savings and checking accounts; an institutional 529 plan with direct payroll deduction; education that helps build and sustain strong credit scores; and free tax preparation services by employee and community volunteers at the workplace. Cote also describes a robust employee wellness program.
In addition, Ryan and her staff do a campaign during National Nurses Week and are actively building out a benefit curriculum, specific to the resident physicians, and an executive onboarding service.
According to Ryan, BMC gets ideas for program topics from information it has about employees on its human resources (HR) application system. Yet, when it comes to whether employees are saving enough to be on the path to retirement readiness, the recordkeeper plays an important part.
Targeting the ‘Red’s
TIAA measures income replacement rates, drilling down to specific participants. Each is given a red, yellow or green rating, and, for its targeted education, BMC focuses mainly on those ranked as red. The retirement readiness measurement is based on whether participants are on track to replace 80% of income in retirement, including their estimated Social Security income. “We have 90% of participants in the plan on track,” Ryan says.
BMC also practices good plan governance. Aon Hewitt, its plan adviser, offers a quarterly investment review and monitors investments, fees and fund selection. Other services it provides are plan benchmarking and informing BMC of best practices and regulatory and legislative updates.
BMC is an entity formed by mergers, so, aside from its core 403(b) plan, it has a grandfathered 403(b) plan and a supplemental 403(b). The plans are governed by a retirement committee that reports to an audit committee.
This year, the hospital intends to consolidate the plans and implement fee leveling. In the early 1990s, before Internal Revenue Service (IRS) regulations were passed, BMC shifted from individual annuities in the plans to group annuities. “When we chose TIAA as recordkeeper, we selected its Retirement Choice account, so we already addressed the issues with individual annuities,” Ryan says. “All contracts are group-based. For this reason it will not be difficult for BMC to use the IRS’s new prototype 403(b) plan document.”
“The actions Kerry takes, and the services she asks for, consistently demonstrate she cares about her fellow Boston Medical Center employees’ retirement readiness and is always looking to improve outcomes,” Cote says.
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