Tennessee Department of Treasury

The Tennessee Department of Treasury started a focused effort in 2021 to reach high-need participants in its RetireReadyTN 401(k) plan for public employees. “The purpose of our plan is to enable everybody who is eligible to be retirement-ready,” says Hunter Bethea, director of deferred compensation at the Nashville-based Tennessee Department of Treasury. “We want the plan to work for everyone. So we want to be able to identify those for whom it’s not working and seek them out to help them.”

All Tennessee state, higher education and kindergarten through high school teachers are eligible to participate in the state’s 401(k) plan. In many cases, they’re required to. Local governments also can opt to utilize the plan for their employees, and 365 of the state’s local governments have done that.

Helping high-need participants started with defining and identifying who fit into that category. RetireReadyTN officials defined it along several dimensions: participants with a projected Lifetime Income Score below 70%; employees who opted out of participating; and participants at equity or inflation risk. The equity and inflation risk categories include any participants 50 and older with more than 75% of their assets held in equities; participants younger than age 50 who have less than 25% of their portfolio invested in equities; and participants older than age 50 who have less than 10% of their portfolio in equities. An analysis revealed that 64% of “do-it-yourself” investors in the plan fell into the equity risk or inflation risk categories.

The Tennessee Treasury did targeted messaging to encourage employees in those groups to have a one-on-one meeting (virtually or in-person) with a RetireReadyTN plan adviser; the advisers are employees of recordkeeper Empower who focus solely on working with the Tennessee system. Each initial meeting includes an overview of plan design and a review of that individual employee’s situation, such as that person’s current deferral rate and asset allocation. A late 2019 upgrade to the Empower Retirement participant portal, made possible by increased data-sharing with the Tennessee system, allows for a more accurate discussion of someone’s retirement-income outlook, because it now incorporates not just data for the 401(k) and 457(b) plans, but also an individual’s projected income from the defined benefit plan. The income projection also includes Social Security benefits and a participant’s outside assets (if inputted).

All employees have the option to work one-on-one with a RetireReadyTN plan adviser for an in-depth analysis of their retirement readiness and other long-term financial goals. The percentage of participants who have a meeting and choose to do that deep dive has increased steadily, from 55% in 2020 to 68% in 2021 and 74% in 2022.

Sixty-five percent of participants who had a meeting in 2021 or 2022 took a positive action within 30 days, such as increasing their deferral or improving their asset allocation. “Our goal for the meetings is that we want our members to understand the retirement offerings that are available to them, to maximize those retirement offerings and to consider the other financial factors at hand for them,” says Ashley Nabors, the Tennessee Department of Treasury’s assistant treasurer for financial empowerment. “We see from the meetings that, generally, people are taking positive action.”

—Judy Ward