Defaulting Into Managed Accounts Helped a Plan’s Older Participants Save for Retirement

In looking to help a population of diverse, transient employees with low literacy rates save more for retirement, Wayne-Sanderson Farms’ director of benefits, Christy Freeman, found that automatically enrolling participants into a managed account service has been highly effective.

The Oakwood, Georgia-based poultry processing company employs about 24,000 people and, according to Freeman, has a nearly 100% annual turnover rate.

Freeman explains that implementing automatic enrollment into the company’s 401(k) plan, as well as implementing auto-escalation, was an integral addition. Because employees tend to move from poultry company to poultry company, she says a “set it and forget it” retirement savings strategy made the most sense for this population.

How It Works

Working with OneDigital, Wayne-Sanderson launched the managed account offering in January 2023 but did not officially start communicating about it until January this year.

Participants younger than 50 are defaulted into the PIMCO REALPATH Blend Date Funds—essentially a target-date fund—Freeman says employees have the option to opt out, as well as choose between allowing the company’s investment partners at OneDigital to manage their investments for them or completely manage the portfolio on their own.

Strong Early Returns

Partly due to participants older than 50 being automatically enrolled in the managed account service, Freeman says there has been a steady increase in employees using those accounts. Currently, she says employees between the ages of 50 to 59 are most likely to stay in the accounts, and more than 6,000 participants are enrolled in managed accounts.

Freeman has also seen an increase in employees younger than 50 enrolling in the managed account offering, which she found particularly surprising.

“We don’t have a group of employees who are going to be going into their accounts on a daily basis,” says Freeman. “We have challenges with multiple languages and technical skill levels in our organization for our hourly employees, who make up the majority of our working population.  We experience high turnover in our industry … so an arrangement that fosters support to help employees make good business decisions regarding their retirement saving was and always has been our goal.”

Overcoming Obstacles

Freeman says the managed account offering is a first step to helping people with the decumulation process in retirement, as it gives them more personalized investment options. However, Freeman says she initially felt anxious about adding managed accounts to the plan when she first discussed it with her retirement plan advisers.

“I felt like we were making a decision for our participants’ future that potentially they hadn’t asked for,” says Freeman.

But as Wayne-Sanderson Farms became more educated on the value of investing in their employees’ retirement  and worked with OneDigital, which provided statistics, on what savings looked like for those in the plan older than 50, Freeman says she realized that putting them in a managed account would help them allocate their assets more appropriately. 

“We have participants all in different places in life,” says Freeman. “So rather than use something that would fit the average person, we felt this group could benefit from additional data points to help improve overall outcomes.”

The additional fees tacked on when a participant is enrolled in the managed account also gave Freeman anxiety, initially, and she says the fees are often what make people opt out. At the beginning and end of the year, Freeman says the retirement committee looks at the managed account fees and ensures they make sense for their population.

“We don’t have a lot of high earners within our participant population,” Freeman says. “We’re processing chickens. It wouldn’t make sense if [the fees] on the managed accounts didn’t make sense based on their wages. So, we do watch that.”

As the managed account offering has only really been active for about eight months, Freeman says it is in its early stages, but she expects that fees for participants will eventually go down as more money goes into the managed accounts.

Keep It Simple

Freeman adds that employees at the company speak up to 36 different languages, although the majority speak either English or Spanish. As a result, Wayne-Sanderson Farms requires that any recordkeeper or vendor it works with provide translations in Spanish and offers a language lab or an in-house interpreter for other languages.

She says Empower, the company’s recordkeeper, does a great job at making sure that those calling in about managed accounts or other retirement-related questions receive information in their language.

For other plan sponsors looking to offer a managed account in the retirement plan, Freeman says it is important to be careful about how the accounts are marketed. She says her team specifically communicated about managed accounts to those older than 50 who were already automatically enrolled in them.

“One of the things I did not want to do was take this managed account [information] and target our entire population,” says Freeman. “Sometimes over-communicating can really cause an issue in a diverse workforce like ours.”

She advises other plan sponsors to keep it simple, clearly inform employees for what they are paying an extra fee and focus first on targeting employees nearing retirement.