Members 1st Federal Credit Union

HEADQUARTERS: Mechanicsburg, Pennsylvania

TOTAL PLAN ASSETS: $34.1 million/918

PARTICIPATION RATE: 91%

AVERAGE DEFERRAL RATE: 6.41%

DEFAULT DEFERRAL RATE: 6%

DEFAULT INVESTMENT: T. Rowe Price Target Retirement Funds

EMPLOYER CONTRIBUTION: 100% of 1% and 50% of 2%-6%

ADDITIONAL PLANS: Not Applicable

Members 1st Federal Credit Union’s core values include financial safety and soundness. So it makes sense that the Mechanicsburg, Pennsylvania-based financial institution has thought through how it defines success for its $34.1 million 401(k) plan: participants on track to replace at least 70% of their pre-retirement income by age 67.

“Based on studies we have seen, our associates need to achieve an income-replacement ratio of at least 70% to be well-prepared for retirement,” says Craig Golfieri, executive vice president, human resources and training at Members 1st, which has branches in seven Pennsylvania counties. The sponsor has seen research on the business cost of employees unprepared for retirement, such as increased healthcare premiums for older employees.

But for Members 1st, having that goal “is simply consistent with our objectives and our culture,” he says.

Eighty percent of the plan’s 918 participants now are on track to meet that goal, taking into account their 401(k) account as well as Members 1st’s $28.3 million defined benefit (DB) plan—which has 915 participants—and their projected Social Security benefits. The safe-harbor 401(k) plan matches 100% of the first 1% an employee defers, plus 50% of the next 2% to 6%, and also allows Roth contributions.

The sponsor keeps a close eye on participants’ progress via the PlanALYTICS plan-health reports it gets from its recordkeeper, MassMutual Financial Group. “The report is generated quarterly, though we thoroughly review it twice a year at our semi-annual committee meetings,” says Lisa McCardell, manager–HR systems, development, & operations. The reports run about eight to nine pages, and provide the sponsor with data such as the percent of participants currently on target to meet the savings goal, broken down by both age and compensation groupings.

Members 1st, also keeps participants up to date about their personal progress on the savings goal. “We provide an annual ‘Total Retirement Statement’ that shows participants their probability of retiring with at least 70% of their pre-retirement income by age 67,” Golfieri says. “It shows all components of their retirement picture: DB benefit, Social Security, and 401(k).” Both the statement and MassMutual’s participant website offer suggestions to help them increase the probability of achieving that result, he adds.

The PlanALYTICS reports also help the plan committee decide what actions to take to help participant outcomes, and McCardell gives a couple of current examples. After reviewing the most recent report, she says, the sponsor decided to conduct a customized communications campaign in first quarter 2016 for non-participants and participants deferring less than 6%. “We also began to explore the possibility of implementing automatic increases on a plan-level, opt-out basis,” she says. “Our plan currently offers this to participants on a voluntary basis.”

And Members 1st hopes to see the current 80% total of participants on track rise further. “We would like to see that measurement increase to 85%,” Golfieri says, “and also increase the probability that our associates can retire earlier than age 67, so that they have the flexibility to retire on their own terms.” —Judy Ward