Baylor Scott & White Health
TOTAL PLAN ASSETS/PARTICIPANTS: $400 million/27,200
PARTICIPATION RATE: 68%
AVERAGE DEFERRAL RATE: 7.38%
EMPLOYER CONTRIBUTION: 100% match on 5% into the 401(k) plan
After a merger in 2013, Baylor Scott & White Health was the largest not-for-profit health care system in Texas and one of the largest in the U.S.. With four qualified defined contribution (DC) plans and 12 nonqualified plans, the Irving, Texas, organization felt the need to consolidate and simplify things for participants.
The health care system managed to pare down to three qualified plans, a 403(b), a 401(k) and a multiple employer 401(k), according to Brad Weatherly, system director of retirement benefits at the firm. The number of nonqualified plans was reduced to seven. The 403(b) plan had just under $400 million in assets, but the employer match of 100% on up to 5% of deferrals goes into the 401(k), so some of those plan assets belong to the 403(b) participants.
Weatherly explains that, before the merger, Scott & White Healthcare had a 403(b) plan and Baylor Health Care System had a 401(k) plan. All participants are eligible for either. The company is contemplating a move to one plan type in the future.
Out of 46,000 total employees, 68% participate in the 403(b), deferring an average 7.38% of pay. Weatherly says everyone is in the 401(k) plan.
But what made the biggest difference for participants was a move from four recordkeepers to one. Weatherly says, with Empower Retirement, employees can track all of their plans on one site, and the organization is able to leverage its economies of scale to get low fees for participants.
The plan sponsor synced up the investment fund lineup for all plans and performed a re-enrollment into target-date funds (TDFs) for qualified plans. Participants in managed accounts or the self-directed brokerage account were not re-enrolled.
Many new tools have been made available to participants. The Lifetime Income Score on the Empower site shows how an individual’s total balance will translate into monthly or annual retirement income. Participants can update their retirement income replacement rate goal, use a slider to show how saving more could multiply retirement income, and can factor in projected Social Security income. Besides including outside savings in the modeler, participants can estimate health care costs according to where they plan to live once retired.
Additionally, a peer comparison tool shows how a participant, on average, is doing in achieving his retirement income goals relative to others. On the website, participants can choose to automatically escalate their deferrals, including whether or not to make the jump coincide with annual raises. They can access investment help to answer general questions and get advice about investment allocations. Finally, a financial wellness offering, Me & My Money, offers education and calculators.
Because these tools were basically new to employees, the health system gave participants some time to get familiar with them. But Empower is now calculating stats on utilization and on changes participants made after using the tools. The health system plans to hold monthly presentations to further encourage tool use.
Weatherly says, under the managed account program, free advice is available from a tool for proper asset allocation, and participants can set up rebalancing annually, quarterly or monthly. The option offers asset allocation advice only; participants are not put into a managed account.
Employees may repay loans upon termination—an innovative offering for retirement plans. This option was added to the 403(b) plan upon conversion to Empower. Weatherly notes that the health care industry in general has high turnover—about 20% on average—and that at Baylor Scott & White, the turnover is a little less than the median. The organization has yet to track utilization of this option.
“In an industry where there will be a lot of mergers and acquisitions, people may leave. We need to be as flexible as we can with these loans, which can really have an impact on retirement security,” Weatherly says. “We are passionate about doing no harm. Let’s create a good experience when people are here, but also if they choose to leave.” —Rebecca Moore