PARTICIPATION RATE: 95%
AVERAGE DEFERRAL RATE: 8.13%
DEFAULT DEFERRAL RATE: 3%
DEFAULT INVESTMENT: Vanguard Target-Date Funds
AUTOMATIC ENROLLMENT: Yes
AUTOMATIC ESCALATION: Yes
EMPLOYER CONTRIBUTION: 1/3 of first 6%, also 3% basic contribution and 3% in cash balance plan
Employees who are fortunate enough to be participants in an active defined benefit (DB) plan may think that’s all they need for a comfortable retirement—and may not even consider saving on their own. However, the 403(b) plan at Northwell Health, a 21-hospital health care system headquartered in Lake Success, New York, has a 95% participation rate, even though employees are in an active DB plan.
Gregg Nevola, chief of total rewards at Northwell Health, attributes this to education and showing employees how small steps can add up. Upon hire, employees must attend a two-day orientation session that not only teaches the traditions, culture and values of Northwell, but includes an emphasis on the 403(b) plan. To make plain its retirement savings culture, the CEO attends the first day of orientation for new hires, which is held each week. Northwell also stresses the importance of retirement savings by, every two years, re-enrolling nonparticipants and participants saving at or below the default contribution rate.
Nevola believes a great example of showing participants how taking small steps helps is the plan’s automatic increase feature. “Employees feel it’s daunting to save at 10% and that it’s hard to move from 3% to 10%, but by stepping up deferrals by 1% each year, we show them how gradual increases are budgetable,” he says.
According to Nevola, the first part of the hospital’s robust educational effort is to encourage employees to meet with Transamerica representatives—six accommodate the different Northwell geographic locations. The hospital also conducts group meetings, uses email communications and offers a financial wellness program with an incentive that goes toward employees’ health benefit costs. Nevola adds that the educational strategy is to start with the basics and move to more complex topics as employees’ progress in their career.
Northwell’s financial and targeted education covers a variety of topics. Knowing that not all hospital staff are able to attend meetings, the health system tapes meetings, then saves them in an online library for employees to view on demand. Nevola notes that last year, Northwell had a series of communications centered around its diversity-inclusion initiatives. For example, there were communications about retirement considerations for same-gender couples and single moms. The hospital also partnered with Transamerica for a five-week custom communication event—prizes were awarded, and, Nevola says, it generated considerable excitement among employees.
He notes that he has also spent substantial time with employees nearing retirement who were unaware of their financial situation. “So we focus on getting people more engaged around age 57—we feel that’s a good runway to age 65—to fine-tune their savings and make lifestyle cost adjustments. We also help them begin to make plans for per-diem or part-time employment and health care expenses in retirement,” he says.
“Eighty-four percent of our employees now have a positive retirement forecast—meaning they are on track to replace 80% of pre-retirement income. Our goal is to continue increasing that number with further education and incremental plan design changes,” Nevola says. —Rebecca Moore