North American Stainless

HEADQUARTERS: Ghent, Kentucky

TOTAL PLAN ASSETS/PARTICIPANTS: $147.1 million/1,486

PARTICIPATION RATE: 98%

AVERAGE DEFERRAL RATE: 8.22%

DEFAULT DEFERRAL RATE: 5%

DEFAULT INVESTMENT: American Funds Target Date Retirement Series

EMPLOYER CONTRIBUTION: 50% match on the first 5% deferred

ADDITIONAL PLAN: Executive compensation plan

For North American Stainless (NAS), choosing to do a reenrollment went a long way toward dealing with employees’ inertia about saving enough for retirement.

The 2014 reenrollment impacted a little more than half of the $147.1 million 401(k) plan’s 1,486 total participants, and saw a 90% retention rate. All employees eligible but not participating were enrolled at 3%, participants deferring less than 3% got boosted to a 3% deferral, and both groups got placed into a 1% auto-increase program with a 10% ceiling. Participants deferring between 3% and 9% were also added to the auto-increase program.

“NAS is very much aware that while most people know what they should be doing to save for retirement, gravity does take hold, and it is easier to do nothing than to do something,” says Sabine DeFilippo, assistant treasurer at the Ghent, Kentucky stainless steel producer. “Reenrollment and auto enrollment, both of which are used by NAS’ plan, counteract those human tendencies.”

In weighing the pros and cons of a reenrollment, NAS considered the increased match cost, DeFilippo says. “However, if participants acted on their own, this cost would also be incurred, and thus is not truly an ‘increase’ related to some type of enhanced or improved benefit,” she says. “It is a cost of operating the plan in its current form.” The sponsor also felt some concern about potential complaints from reenrolled employees “if they truly did not wish to participate, and once more had to opt out,” she says. “However, this concern generally has not materialized and, in fact, many people tend to be more appreciative than annoyed.”

Employers thinking about reenrolling employees often worry about pushback. But Valerie Hines, human resources and safety manager, says NAS didn’t really experience any. “All employees who were not participating in the plan were sent flyers to their home address, notifying them that we would be auto enrolling them into the plan,” she says. “They were given instructions on how to opt out if they chose.”

Just 10% of reenrolled employees opted out of participating, and the reenrollment joins other plan-design features that have helped boost participant savings in the past five years. Participation has grown from 88% in December 2010 to 98% currently. And as of year-end 2015, 68% of participants get auto increases, up from 19.4% in September 2013, prior to the 2014 reenrollment.

The first reenrollment went so well that the company has decided to do a reenrollment every two years, and at press time had a second round underway. “Our current reenrollment was targeted at those not participating or participating at less than 3%,” DeFilippo says.

Asked about the sponsor’s ultimate goal for plan participation, DeFilippo responds realistically. “Our goal is always 100% participation,” she says, “but we recognize that some folks may never participate, and that others may have to cease participation at times due to financial concerns.”

—Judy Ward