Auto-Enrollment to the 401k Rescue
Auto-enrollment is one of the more successful participation stories in the retirement plan industry. Implementing auto-enrollment is not always an easy concept for organizations to accept due to costs, concerns about reducing an employee’s check and fear of the unknown. At the conclusion of a TPSU Fiduciary Education Program held at on-campus at Hawaii Pacific University in Honolulu, Hawaii, Fred Barstein, The Plan Sponsor University (TPSU) Founder and CEO, spoke with Alan, Treasurer and Chief Financial Officer at one of the largest associations in Hawaii. TPSU Fiduciary Education Program held on campus at Hawaii Pacific University in Honolulu, Hawaii covered many aspects of 403b plans and 401k plans. Fred Barstein and Alan discussed the many challenges of getting a participant funded retirement plan to a participation rate of 100%. Alan shares his experiences when working with his company’s eligible employee base. Learn the strategies which Alan has used and what he will change on a going-forward basis.
Full Transcript Here
Fred Barstein:
Fred Barstein with 401kTV here in beautiful Honolulu where we just completed a TPSU Program. And I am here with Alan. Welcome Alan.
Alan:
Hello.
Fred Barstein:
Okay if we ask you a few questions?
Alan:
Sure.
Fred Barstein:
Okay. So before we do, why don’t you tell us a little bit about yourself, your company, and your role there.
Alan:
I’m Alan. I work for Hawaiian Employers Council. We have 29 employees, and I am currently their treasurer CFO.
Fred Barstein:
And how big is the Hawaiian Employee Council? How many members do you have?
Alan:
Members, we have about 800 members.
Fred Barstein:
Great. Thank you. So today, you talked about when you do an annual review, you talk about the retirement plan. What is it that you do?
Alan:
So… When we have our merit increases annually, I find out who is not maxing on our contributions. And I talk to them individually. There’s only two of them, that because they are having their merit increase, why don’t they at least increase or put in 1% or 2%, whatever they could, and they wouldn’t miss any of the increase, I mean their increase will be smaller but, their savings…
Fred Barstein:
They’ll be saving more. And so, after that conversation, do they take action? Has that been effective?
Alan:
Right now, yes, on one of them. The other one, she just got into the plan, so at the next review I’ll do the same thing with her.
Fred Barstein:
Okay.
Alan:
But, I’m going to work on her.
Fred Barstein:
And why do you do that? Why do you take the time to do that?
Alan:
Well, for us, we have always had 100% participation in our 401K. And so I don’t want to drop that rate down. So at least put in something. Because it’s getting matched.
Fred Barstein:
Right. You might as well. So, final question, a couple of things you picked up that you may want to take back when you…
Alan:
Well, because we’re not getting 100%, auto-enrollment is one of them. Maybe auto-escalation, because there are some people that just put in the 6% for the match. Now, we’d like them to save more.
Fred Barstein:
Maybe a stretch wrench?
Alan:
Stretch wrench.
Fred Barstein:
Very good. Well thanks for your time today.
Alan:
Thank you.
Fred Barstein:
And thank you for watching 401kTV. Stay tuned.
