Deferral and Participation Rates Jump at California 401k Plan. Watch how the HR manager of a 600 person manufacturer was able to increase deferral and participation rates by 40% above national averages.
Though it’s hard to get people to attend the annual 401k meetings, the HR manager meets one on one with those that do attend and shows them, on the one hand, how little a 1% increase decreases after-tax pay, and, on the other hand, how much money they will have in retirement. They time the increases after pay raises so people don’t see the loss.
Participation has risen from 67% to over 90% and deferrals have increased to 7.35% from 5.25%
The plan sponsor is preparing to institute auto-escalation with the support of senior management who care about the company’s 401k plan which is key along with showing people the actual estimated amount they will achieve in retirement if they participate and increase deferrals.
Next up: review plan documents, loan policies and consider a stretch match.
