Crate and Barrel Holdings

SOME CONSUMER GOODS RETAILERS feel it’s enough to provide an average retirement planning program, so that employees who stay for a significant amount of time—perhaps moving into management roles—may choose to enroll and start saving for their future when the time is right.

Not so at Crate and Barrel Holdings, the international housewares and decor retailer headquartered in Northbrook, Illinois. According to Jeremy Yonan, director of total rewards, Crate and Barrel has fully embraced its responsibility to provide substantial and responsive retirement benefits curated specifically for the retail workforce.

What does this look like in practice? As Yonan explains it, the plan has implemented all of the progressive design features one would expect to see at the biggest, most sophisticated employers. The company automatically enrolls all full-time and part-time associates, and it automatically increases everyone’s allocation by 1% per year if they are saving below 15%. Each year, Crate and Barrel performs a re-enrollment to sweep participants deferring 0% back actively into the plan.

Jane Ravey, senior relationship manager with Empower Retirement, notes that Crate and Barrel took her firm on as recordkeeper in July 2019, at which time many of the aforementioned plan design features were implemented. She says, by this past December, assets in the plan had increased from $210 million to $250 million, while the average participant deferral rate increased from 7.8% to 8.7%. At the same time, the percentage of participating associates receiving the full company match increased from 59% to 83%.

According to Ravey, it is abundantly clear that Crate and Barrel aims to support its entire workforce.

“Much of the committee’s focus is on helping those who are underserved and addressing the needs of the diverse worker population,” she says. “[This sponsor’s] taking care of everyone, not just one certain segment of higher-compensated employees. This plays out through its embrace of education programs, the offering of financial wellness support and the close tracking of participant outcomes.”

As Ravey recalls, Crate and Barrel took time during the 2019 conversion process to re-evaluate its default investment offering. Defaulted associates now utilize target-date funds (TDFs) if they are under age 45, while those 45 and up will transition to Empower’s Dynamic Retirement Manager (DRM), which sweeps the participant into a custom-managed account program, myFinancial Future, offered through the plan’s adviser, Mesirow Financial. Between June 2019 and the end of last year, the number of associates using the plan’s various advisory services had increased from 136 to 3,249.

Reflecting on the experience of operating a retirement plan through a period marred by a pandemic and a global recession, Yonan says it was stressful but also rewarding. He says the company made it a priority to communicate clearly all of its benefits and employment decisions, including a temporary employer match suspension that was implemented as part of the firm’s broader cash management strategy.

“Early on in the pandemic, as the lockdowns happened and things looked pretty dark, we had to pivot and ensure that we had the cash flow that would be necessary to keep our operations going and to keep people employed,” Yonan recalls. “We told everyone clearly that we fully intended to reinstitute the match as soon as possible and that we would make everyone whole with retroactive, true-up matching. That was a powerful commitment and message from our CEO at that time.”

As of when last May and June rolled around, the growth of Crate and Barrel’s e-commerce business had made the cash flow picture look much more stable, and the firm was soon able to reinstitute its match. In Yonan’s view, this experience actually strengthened his associates’ perception of the retirement program and the company’s commitment to their financial future.

Chris Pohlman, senior managing director and relationship manager with Mesirow, says it has been a pleasure to work with Crate and Barrel over the years—and especially in the last year-plus since the retailer moved to Empower and further embraced his firm’s capabilities. “This level of commitment is special to see in the retail industry,” he observes.

Pohlman says the tailored communication campaigns that Empower provides are a big part of Crate and Barrel’s success.

“They help the population understand that they have access to one-on-one educational opportunities with a certified financial planner [CFP] from Mesirow—and why it’s important to take advantage of this resource,” Pohlman says. “It is special that the participants can access this education, whether they are on the executive team, or a recent hire moving inventory in a warehouse, or somewhere in between.”

Besides the addition of environmental, social and governance (ESG)-themed investment options and the implementation of fee leveling, another recent plan design change saw the number of permissible loans reduced from three to one. Yonan says this was a challenging decision to make, given the fact that many of the participants in the plan lack significant amounts of liquid savings. But, after considerable deliberation, the committee decided this was a necessary step to protect people’s long-term financial futures.

“Working with Empower and Mesirow, we dug deeply into why people are taking out short-term loans from our plan, and we did the work to try to figure out how this change could impact our people,” Yonan says. “Ultimately, we concluded the best route would be to restrict loans but to also create a different option for those people who would inevitably need support in an emergency.”

To this end, Crate and Barrel implemented what Yonan calls an associate support fund, which he describes as an emergency hardship loan for associates who confront a number of challenges. The new loan program is not linked to the retirement plan.

“Your need could be health-care-related, or tied to an environmental emergency or natural disaster, civil unrest or other things,” Yonan notes. “The fund is sponsored by Crate and Barrel, but it’s primarily funded by associate donations. At last check, after the company’s initial $25,000 seed sponsorship, the fund has grown to more than $250,000. So far, more than 60 people have taken a loan from the program. These are people who would have had to draw from their retirement account.”

—John Manganaro