Stacking Up: Who Offers the Best Retirement Plans?

Are certain industries more focused on winning the benefits game, and if so, why?

“If we have a portion of our employees who don’t retire at retirement age, what are the implications for us as an organization?” More and more plan sponsors are asking themselves this question, says Brodie Wood, senior vice president in not-for-profit markets at Transamerica Retirement Solutions.

Benefits packages seem to be improving across the board, and Wood finds that “a lot of the same structural shifts that we’ve seen in the corporate space are bleeding over to the not-for-profit space.”

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“I think retirement plans are in an evolutionary phase,” agrees Kathleen Kelly, managing partner at Compass Financial Partners. “Our clients are constantly looking at them, evaluating whether changes that have been made have had the desired outcome and, if not, what needs to be tweaked and improved to get participants to a place where they can retire with dignity. This is not a ‘one and done’ program; it is always being looked at, and plan sponsors and advisers are focused on constant improvement.”

What that means for specific benefit programs can depend on the industry or “even regions of the country,” says Margaret McKenna, EVP of Workplace Investing’s Relationship Management team at Fidelity Investments. “We definitely see differences, no question about that,” she says, “but it goes beyond industry.”

The culture of companies in different parts of the country will affect how benefits are organized. “Silicon Valley has a very different mindset around benefits than the East Coast,” McKenna says. Tech firms are generally more focused on including equity compensation; more traditional benefits programs likely still offer a defined benefit (DB) plan. “Companies like utilities have more traditional benefit plans—a 401(k), a pension and a large amount of health and welfare benefits—those are the more traditional benefit offerings,” she notes.

“The most competitive benefits we see most often are from industries that have very heated competition for human capital. Their benefits programs are truly a way to recruit, retain and ultimately reward employees,” Kelly says. “In technology, for example, a lot of clients are vying for top talent in areas that are very saturated with top employers, and they have to put in broad and rich benefits programs, not just retirement benefits.”

In general, Kelly says, “higher education—colleges and universities—tends to have very strong benefits; tech has very strong benefits; and financial services typically have very strong benefits as a whole.”

NEXT: The drivers of plan design

“As we look at our client base, it’s all over the board in terms of drivers for plan design. The benefits package often depends on the size and scale of the organization,” says Kelly. “If it’s privately owned, single family or multigenerational, we often see very paternalistic approaches to benefits. Those owners may see their employees around town and tend to have long-tenured employees. This is very geographically based, if you’re the only employer in town, that may impact the generosity of benefits offered.

“The degree of plan design that’s implemented also varies,” Kelly adds. “The companies that are the most generous are looking at company contributions and what dollars are going to the sole benefit of the participants, but also are reviewing their vesting schedules and eligibility periods, and may reduce those to attract employees and talent across the board.”

“When we look at who’s participating in plans,” McKenna says, “we see the highest participation rate in utilities, followed very closely by financial services, insurance and also manufacturing companies, as opposed to food service and accommodation or hotel services.”

This is likely due to the nature of the work. “Utilities jobs are very physical,” McKenna says. “These companies need to be certain that people are retiring at reasonable ages, and they want to make sure there’s a steady inflow of new talent.” She advises employers to understand the longevity of the average worker when designing the benefit program. “Do people come in and stay with us, or are these short-stint employment opportunities?”

“At the other end of the spectrum,” Kelly says, “some of our clients set up a program to keep aging employees employed. They build out the benefits program to adapt to a work force that maintains so much intellectual capital that they want those people to stay. The flip side to that discussion, however, is how plan sponsors improve outcomes for the aging work force. The reality for many people is that when they reach the typical retirement age, if they do not have the financial wherewithal to retire, they don’t, but that segment of the population can be more expensive for the employer. Better programs help people to save and generate an income replacement that is satisfactory.” Sponsors have to ask themselves: “Does the program align with our intention to have workers be able to retire with dignity, if they take full advantage of the program offering?”

Teaching positions can have a little more leeway when it comes to faculty fitness. Still, “in higher education, there’s a disproportionate number of faculty members who don’t retire at normal retirement age,” says Wood. “Professors generally start saving later because they’re in school for so long, and people who gravitate toward teaching or not-for-profit work are generally more risk-averse. That translates into a more conservative approach to investing,” which he says can really drag on where they end up.

Nonprofit organizations are often guilty of paternalism, he finds. “They might hand-hold their employees a bit more; they may view it as their responsibility to take care of workers, and that might translate to more generous benefits,” he says.

“In many cases, not-for-profit organizations are more generous with their defined contribution plan, whether they’re sponsoring a 403(b) or 401(k). In those cases where they are, I sense the following drives a lot of it: Not-for-profits generally pay a little less versus corporate peers, and often it’s the benefit package that makes up for a lot of difference in compensation.” For example, he says, “In higher education, statistics show that there are larger than average employer contributions to the retirement programs.”

NEXT: What PLANSPONSOR’s DC survey shows

Data from the 2014 PLANSPONSOR DC Survey confirms what Wood, Kelly and McKenna are saying.

Higher education and not-for-profit health care are the industries most likely to offer immediate eligibility for their retirement plans, at 71.2% and 71.3%, respectively. Higher education is also the most likely to have 100% immediate vesting (62.7%) and the most likely to provide an employer match contribution that equals more than 6% of a participant’s salary (58.3%).

Utilities—in which work is physically demanding and employers want to encourage retirement at reasonable ages—is one of the industries most likely to use automatic enrollment, according to the DC Survey. The industries most likely to have this plan feature are Fortune 1000 (66.5%); utilities (60.3%); and automotive manufacturing and parts (59.6%).

“When clients offer auto-enrollment into a 401(k), they dramatically impact participation in those plans,” McKenna notes. “On a case-by-case basis, you can see companies taking different tactics in terms of their plan design to encourage participation. Auto-enrollment has become a very important feature, especially in 401(k) plans. We have seen wide adoption in a number of industries,” she says, the exception being industries that experience a high rate of turnover among workers.

Utilities are also among the industries most likely to have default deferral rates of 6% or higher—pharmaceutical (50%) and utilities (41.5%). The industries most likely to use automatic deferral increases are Fortune 1000 (56.8%); utilities (40.3%); and oil, gas, energy and mining (39.5%).           

McKenna finds the ability to make Roth after-tax deferrals is predominant in the professional services industries—law firms, consulting firms, medical practices, engineering firms, etc. “We also see it in professional services fields, such as pharma, engineering and legal firms, as opposed to the construction industry, where the numbers are significantly less.” And it’s not just for new employees, she says, but longer-tenured workers as well.           

The PLANSPONSOR DC Survey confirms her experience: The industries most likely to offer Roth deferrals are: financial services (76.7%); accounting/certified public accountant (CPA)/financial planning (75%); consulting (72.7%); and law firms (69.8%).

The generosity of financial services firms is also seen in the fact that industries in which the company is most likely to pay all plan administrative and recordkeeping fees are accounting/CPA/financial planning (43.1%), banking (47.6%), and financial services (50.4%).

Industries most likely to provide managed accounts include accounting/CPA/financial planning (47.1%) and for-profit health care (44.7%).

“To build out a best in class retirement plan, capitalize on automatic features,” Kelly suggests. “We think auto-enrolling at a higher default percentage makes a lot of sense. This works for attracting new talent, but people coming from another company were likely saving at a higher rate at their old company as well. Auto-increase also is very important, otherwise participants think the default rate is the advisable rate. Today, we’re seeing more clients auto-escalate by 2%, to get participants up to a 10% or 12% deferral rate faster. There’s so little opting out happening that capitalizing on participant inertia and getting them there faster is very beneficial. Offering a managed account program we think is also a best in class option.”

NEXT: Financial wellness and other benefits offerings

When it comes to extended benefits, Wood says, “a lot of nonprofits invest in in-person education, more so than in the corporate market, which can be a huge benefit for the staff who are not saving enough and don’t have a financial background.”

Kelly agrees that the rise of financial wellness programs can be a major differentiator for employers, no matter what the industry. “Providing a resource that’s very much needed by employees helps them manage other concerns—budget, debt, possible impediments, etc. Even if you have the best-designed plan with auto-enrollment and -escalation and a great match, it’s hard [for participants] to get the most out of it if you don’t have a good handle on personal concerns.”                        

“People today come into the work force not thinking about saving for retirement,” McKenna adds. Rather, they are more focused on immediate concerns: paying off student loan debt, buying a home and saving to for their own children’s tuition costs, among others. Plan sponsors and employers are becoming more aware of how workers’ outside assets, or lack thereof, can have a direct impact on performance and productivity.

“[Financial wellness] offerings lead to more satisfied, engaged and loyal employees,” Kelly says, as well as greater productivity, “because people aren’t worrying about financial concerns during the day. Better benefits lead to lower turnover, higher tenure and employees having a sense of their employer’s loyalty to them.

More firms are also looking at improving the quality of life and work/life balance of their employees. For example, McKenna says, companies are offering maternity and paternity leave to employees for an extended period of time, much more than what’s required by law. “We also see widespread adoption of clients looking at their health and insurance benefits and taking a wellness focus to help people get healthy. Those benefits are becoming more of a focal point.”

“The tighter the job market and competition is for that human capital,” Kelly concludes, “the more the benefits become a differentiator. Recognize that there’s room for improvement—always.”

SURVEY SAYS: Childish Behavior in the Workplace

Recently, we covered a survey that suggests childish behaviors in the workplace are common.

Last week, I asked NewsDash readers, “Which childish behaviors have you witnessed in the workplace, and can you share a specific example?”

Every childish behavior listed has been witnessed by the majority of responding readers, except starting a rumor, which has been witnessed by 40%. Whining was the most frequently cited childish behavior witnessed in the workplace (75.6%), followed by tattling and refusing to share or help (64.4% each).

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Pouting, making a face behind someone’s back, storming out of the room and throwing a tantrum were each selected by more than 55% of respondents, while playing a prank was selected by more than 51%.

A good number of respondents shared specific examples of childish behavior they have witnessed in the workplace.

Examples of childish behavior witnessed 

Sitting at the very end of the table away from all others in the meeting with arms crossed and a scowl on their face and refusing to participate in the meeting and discussion

2 co-workers while outside on a walk came across a garter snake and thought it would be funny to bring it into the office. They threw it on a conference room table while a meeting was occurring freaking out everyone.

A Filipino coworker thought her new boss was giving her more work than others and took it to be discrimination. We were all working long and hard hours (Accounting) so I can't comment on that perspective. But at one point she thought she had had enough and she got down on her hands and knees and bowed down in front of him saying "master oh master what would you like me to do next." After many, many years of working there, she was released for this antic and proceeded to make a claim at the EEOC against the company for discrimination. I believe I heard she won a settlement of some type.

After being told his plan was incomplete, full of errors and omissions and not viable, my boss left the office and drove off for the rest of the day, telling the admin that "they made me so mad, I'm going home."

A brother of the company owner (small 30 person office) bcc's his brother when he wants to make someone look bad and himself look good. He also pouts and throws a tantrum until he gets his way. He also, immature like, breaks office rules to show everyone he can get away with it but everyone else can't. He also lies to get his way. He also will not share things with others to make himself look better. He is very, very immature for a 50 year old.

Oh, how I wish I could! Afraid she would recognize herself if I describe the incident(s).

Employee refused to perform a task stating that it was below his level. When I complained to a higher authority (who believed that the employee was a "Superstar"), all he did was warn the employee to be careful about how he answers my requests. I had to do it myself eventually.

Someone unrolling all the toilet paper in the stall and leaving it on the ground. Someone adding sugar to the coffee pots. Someone taking garbage out of the can and putting it in someone's office.

An employee copied our VP on a string of e-mails. The other employee was concerned she was "tattling" on her so an argument ensued that ended with the following: "You've messed with the wrong manager." "Are you threatening me? Is that a threat???" And then pencils were thrown...

There is also a lot of eye rolling when these things are witnessed. Some are even done by upper management!

Cliques it seems sometimes like back in grade school.

A 57 year old man coming to me to complain that a 20 year old kept looking at him and he didn't like it.

I have witnessed an employee sticking out her tongue at a person behind her back and other employees snapping rubber bands over cubicle walls.

Examples of childish behavior witnessed (cont.) 

I had a manager who hung up on a conference call full of consultants (about 20) because he didn't like what they were saying. It sends a message to staff that it's okay to be unprofessional.

Two coworkers rolling their eyes and sending annoyed looks at each other when another coworker talks or raises questions during meetings.

Many years ago, I drove my minivan through my garage door and called in late to work the next morning because I had to wait for the repairman. When I finally made it in to work, I found that the door to my office had been covered up with paper and the only way to get in was to break through the paper "door"! So much for trying to slink unnoticed into work...

Senior VP throws tantrums when he is in a bad mood. He can only make himself feel better by making others miserable,

I once had a woman stop talking to me for three weeks. in meetings she would ask other people to tell me things and would send emails to my co-worker and ask that they be forwarded to me. All this because she saw me talking to our CEO and thought I was trying to 'brown nose him' to get a lead spot on a project. I was actually talking to the CEO about recommending her to a spot on an expansion project. Needless to say, she didn't get the spot, she got fired.

Someone had started a rumor that I was leaving the company. I found out when I was asked by a coworker where I was going. When I asked him what he was talking about, he told me that he had heard I was leaving. I told him to ask that person where I was going because I didn't know.

I've witnessed all of this at some point in my career! One of the more unusual things I've seen is someone getting up from the table every week, during the weekly project meeting and standing in the corner of the conference room, crying, because she didn't get her way.

I was the unfortunate person to inform one of our employees the he missed the deadline to enroll in the Flex plan. He left my office, cussing loudly all the way down the hall.

Buzzword Bingo was distributed prior to a meeting.

I have witnessed an employee taking credit for another employee's work.

One day my manager, a toxic boss, opened a file drawer and saw that the folders had not been labeled to her satisfaction. She started ranting and plucking folders out of the drawer and flinging them on top of the file cabinet while I stood by feeling like a frightened school kid being yelled at by a teacher (and I wasn't even the offender who mislabeled the folders). I've never seen such a childish fit of pique. I almost quit that day but my coworkers - sad to say - convinced me to stay.

My former boss used to toss popcorn from his office into the cube of our HRIS Manager - all in fun as the HRIS Manager would toss it back.

A person was on the phone answering questions from a client. The client asked one question that was part of MY job, so the person transferred the call to me to answer the one question, and then I had to transfer the client back to that person to finish the phone call. SERIOUSLY? The person certainly knew the answer to that question and now we look like buffoons to the client after passing her back and forth.

In verbatim comments about childish behaviors in the workplace, several readers took the opportunity to vent. All agreed that childish behaviors are bad for the workplace, but several said harmless pranks were not immature, but fun ways to get some comic relief from stress. A few noted they we all, or they, act childish sometimes: “Respectfully, I invoke my 5th amendment right to not incriminate myself.” Editor’s Choice goes to the reader who said, “Sooner or later, you come realize that your workplace is a preschool, an elementary school or a high school. Sometimes all three with a little of insane asylum thrown in for good measure!”

A big thank you to all who participated in our survey! 

Verbatim 

It's like junior high all over again at the workplace....I survived junior high once and don't want to go through it again.

Some go too far and deserve to be dealt with appropriately, especially if this isn't the first time that same or similar behaviors have taken place. Some are harmless, like taking someone's shoes and hiding them (temporarily of course) Those kind of pranks give comic relief to a sometimes tense environment. And we all have bad days that we exhibit in our facial expressions unknowingly.

It's stunning to see how many upper level managers and executives display childish behavior, or are just otherwise mean or defensive.

Work place is where team work should thrive and everyone should want their co-workers to succeed. Childish behaviors can be the destruction of so much, like, motivation, moral and growth. We are all in this together so let's make it the best place to work not a High School.

I expect childish behavior from...oh, I don't know...children! I see the "high-school" groups...you know, the ones you aren't invited to join. who stand together in a group and stop talking when you walk by. As if there isn't enough stress in the field we are in anyway...now I have to contend with the "mean girls!" In the words of the famous Charlie Brown..."ARGHHHH!"

Too many to cite.

It's time for people to grow up. With the emerging Millennial workforce, more childish behaviors will continue to rise until they reach a level of professional maturity.

I didn't tolerate it from my children (and now grandchildren). Why should I have to deal with it on the job?

We are all children at heart. If you work at a place long enough you see all the good & bad in people.

All I can say is I much prefer a pouter over a whiner any day!

Verbatim (cont.) 

People get older but really do not grow up!

I have to admit that at times I laughed at the childish behaviors because they were done playfully and without cruel intentions. We do not laugh often in our workplace and that concerns me.

In my experience, childish behaviors in the workplace are a direct result of incompetent or childish management.

They don't belong in the workplace. After all, we are adults - correct?

All of the above should have been a choice! Over the years, I've seen them all.

Pranks can be funny and actually build up a team as long as they aren't mean spirited. Whining, pouting, tattling, etc. are not only childish, but I have experienced these most often in offices with lots of women. I'd rather work with men any day than a bunch of petty women!

Unfortunately most of the childish behavior that I see at my workplace comes from senior management.

If I wanted to be around childish behavior I would just stay home. However, I feel it makes me look highly mature when dealing with silly people. No one outside work would believe I would be the mature one in an immature situation!!

It's disruptive and unproductive.

Verbatim (cont.) 

Sooner or later, you come realize that your workplace is a preschool, an elementary school or a high school. Sometimes all three with a little of insane asylum thrown in for good measure!

Grow up!

I don't mind the occasional prank (assuming it isn't malicious), as it keeps the team loose and positive.

Unacceptable, but it happens.

In my opinion childish behaviors are not good for a healthy work environment. They quickly send a team off track - and can easily get out of control.

We all do something childish from time to time, so I don't think I have the right to judge. However, there are people who just don't live in the real world and don't see how they come across.

Certain childish behavior can be a stress release. When it goes too far though, that is when HR needs to step in and take appropriate action.

Respectfully, I invoke my 5th amendment right to not incriminate myself.

The consistent childhood behavior I see is a complete lack of understanding that other people share a work space or common area, i.e. the kitchen. It blows my mind that people can leave dishes, trash, etc. for other people to clean up. These are people who obviously never learned to clean up after themselves. They are the same people who will whine, throw tantrums and storm out of a room if they don't get their way. Thanks for opportunity to vent.

"Frankly, that's not my job." I HATE THAT PHRASE! Just *%$# DO IT! If you have the capability, it will take less time to do it than to try to pass the work off to someone else!

I didn't know I was going to be working in what often seems like an adult day care center.

 

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Asset International or its affiliates.

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