Norton Healthcare

Who says that Millennial employees, the generation born between 1981 and 1996, won’t save for their retirement? Norton Healthcare, Inc., a hospital and health care system with main facilities in Louisville, Kentucky, has seen that if they’re given a helpful nudge, Millennials actually like it.

Automated plan design features are key. “Forty-nine percent of our employees are Millennials, and they have a number of competing financial priorities, such as starting a family and saving for buying a house,” says John Hammond, system director of human resources (HR) at the hospital and health care system. “When you set up automatic enrollment and automatic escalation for them, it puts them on sort of a ‘fire and forget’ path. If they don’t touch their account, they will see soon that they’ve started to build a little nest egg, and that motivates them to save more.”

Participants aged 18 through 29 in Norton Healthcare’s 403(b) plan currently average a 7.1% deferral rate, while those 30 through 39 average a 7.7% deferral. “We have most of our younger employees putting money away for their retirement,” says Gladys Lopez, senior vice president and chief human resources officer at Norton Healthcare. “Their retirement isn’t front-of-mind for them now, but they’re putting money away that will help them in the future, when they do retire. We’ve seen how, if someone takes care of helping them get started, they actually appreciate it.”

Norton Healthcare’s plan committee reviews the 403(b) plan’s design at least annually to see if changes should be made and monitors retirement-readiness data for its participants more frequently. “Our recordkeeper Principal has an interesting way of showing us our participants’ progress on retirement readiness,” Hammond says. Norton’s sponsor dashboard always displays current data on the participant base’s average retirement readiness percentage, “so we can see it at any time,” he says. “We watch it pretty closely.”

Norton started doing auto-enrollment in 2012, and its 6% default deferral is aimed at incentivizing participants to maximize the employer match. “We want to make sure our people can get the most bang for their buck out of the match,” Hammond says. The plan matches 100% of 4% of pay an employee defers and, if the organization has met its financial goals for the year, provides an additional match of up to 2% based on an employee’s years of service. The plan shifted its auto-escalation ceiling from 10% to 15%, as of this January.

Participation has risen to 94.1%. The plan performed a re-enrollment in 2018, sweeping in, at 6%, nonparticipants and participants who had been saving less than 6%. Hammond says he expects the plan committee to begin talking soon about possibly doing another re-enrollment sweep in 2022.

“It goes with our overall company philosophy,” Hammond says of doing the first re-enrollment. “We very much believe that we should be helping our employees prepare for a comfortable retirement. We felt like, ‘Let’s do a sweep. If employees have stopped contributing or reduced their contribution, this is an opportunity to kick-start them and get them going again on saving for their retirement.’”

—Judy Ward