Miami Children's Health System
TOTAL PLAN ASSETS/PARTICIPANTS: $269,487,830/6,274
PARTICIPATION RATE: 95.5%
AVERAGE DEFERRAL RATE: 4.24%
DEFAULT DEFERRAL RATE: 3%
EMPLOYER CONTRIBUTION: 100% up to 3% of deferred salary, nonelective 3% contribution
Through strategic planning, Miami Children’s Health System has almost tripled participation in its 403(b) plan—from 33% in 2011 to 95.5% today.
According to Anton Tansil, vice president, key accounts, at its recordkeeper Prudential Retirement, from 2012 through 2015 the health system, covering three southeastern Florida counties, began executing several initiatives to help improve employees’ financial health.
In 2013, it implemented automatic enrollment at a 3% default deferral rate, and dropped its nonelective contribution from 6% to 3%, thereby removing a disincentive for participants to increase salary deferrals, recounts Michael Kushner, senior vice president and chief talent officer of the health system.
In 2014, it instituted auto-re-enrollment, requiring employees to opt out annually to avoid joining the plan, Kushner says. “After a while, some just gave up and let their money be put into the plan.” And last year, the plan implemented automatic deferral escalation of 1% annually, up to 6%.
At the same time, the health system was able to reduce plan expenses by implementing, for example, a lower-cost fee structure within the investment menu. And, with the help of Prudential, it raised employees’ awareness and understanding of the plan through an in-depth educational effort.
Last year, to sustain the gains made and better define the path forward, the health system and Prudential began executing a further, documented three-year strategic plan.
One guiding principle for this plan is that more automation improves efficiency, while better cost management reduces the financial impact to both participants and the hospital. Therefore, Miami Children’s is automating formerly manual processes, such as enrollment and termination events. Other key goals are to increase awareness about, and the competitiveness of, the retirement program and to provide a program that can help employees retire on time. Kushner says that goal is based on employees having, from all sources, a minimum of 75% income replacement—not on a particular age.
Built into the strategic plan is a timeline that outlines each year’s action steps and plan design improvements to support the health system’s vision for the retirement program and the documented participant and plan sponsor goals.
Since adopting the strategic plan, the health system has exceeded its participation-rate target and maintained diversification where over 84% of participants are invested in four or more funds, for just two successes. "We anticipate that, as we continue to implement the various components of the plan, we will continue to see additional metrics achieved," Kushner says. —Rebecca Moore