Equity Residential

Equity Residential is one of the largest apartment owners in the U.S., actively investing in rental properties in the urban core of cities and in high-density suburban areas. A public company and a real estate investment trust, Equity acquires, develops and manages multifamily residential units in the form of garden-style, high-rise and mid-rise properties.

Karla Schaefer, Equity’s director of employee benefits, says the company automatically enrolls participants at 8% salary deferral and has for more than 10 years. The company also sweeps participants back to 8% in December each year if they are contributing less than 8% or not at all. Schaefer explains the timing was chosen so that when annual pay increases process in January, the first paycheck to which the auto-sweep applies, the increased contribution is disguised by the higher paycheck. This makes the contribution increase easier to ignore, and the participant is less likely to opt out.

Equity Residential also automatically escalates salary deferrals by 1% annually, up to a maximum of 15%. Bob Lawton of Graystone Consulting, the plan’s adviser, says these changes are “nudges in the right direction” designed to break inertia. Leadership noticed that auto-enrollment at 8% was helpful, but the 8% figure was “sticky,” as an easy number for participants to stay at long-term, rather than gradually increasing deferral percentage over time. The choice for auto-escalation was a consequence of continuously monitoring participant engagement, according to Lawton.

The plan offers a 4% matching contribution for non-highly compensated employees and a 3% match for highly compensated employees.

By all accounts, quarterly plan meetings are lively and substantive. Members of the committee bring research and talking points and proactively look for plan improvements, according to Schaefer. Research into retirement security drove the auto-escalation ceiling of 15%, the number usually recommended for income replacement in retirement, says Schaefer.

Lawton says Equity Residential’s plan committee is very open to new ideas and looks to “evolve the plan to make it competitive.”

Barry Stoey, the senior relationship director for the plan’s recordkeeper, Principal, says Equity’s CEO and CFO both worked their way through the organization and spent time on the retirement committee, intentionally ensuring that the most senior leadership understands the workings of the plan and is invested in its success. Stoey explains that committee members are collegial and highly motivated and emphasizes their enthusiasm and involvement: “Man, they are involved.”

The staff at Equity Residential is young, yet experienced. The average tenure is 9.9 years, but 47% of employees are Millennials. Stoey says the plan tries to get younger participants engaged “right out of the gate,” and the automatic features are the main tools in accomplishing this. Since Equity Residential employs a generationally diverse workforce, Stoey says managed accounts were a key feature to add to the plan to empower participants to further customize their account and have faith that their contributions are going into investments that suit them best, not a one-size-fits-all investment strategy.

“We implemented a two-pronged approach, with both a guidance option that was free of charge, as well as a fee-based advice service,” Schaefer says. “With both options, participants can choose to share some information about their retirement goals and objectives and risk profiles and then receive professional guidance and advice to help them develop action steps, inclusive of both savings rates and investment line-up recommendations, to achieve those goals.”

—Paul Mulholland