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Auto Enrollment Challenges without 360 Payroll

Auto Enrollment Challenges without 360 Payroll

Automatic enrollment is a proven strategy for plan sponsors who wish to be pro-active in helping employees to become Retirement-ready.  The practice of automatic enrollment has helped plan participants to establish and grow retirement savings since the early 1990s – with McDonalds Corporation being the first firm to offer the feature. All companies do not use automatic enrollment; however, companies who do incorporate the automatic enrollment feature into their plan frequently report favorable results.  At the conclusion of a TPSU program held at the location of Villanova University in the greater Philadelphia, Pennsylvania area, Fred Barstein, Founder and CEO of The Plan Sponsor University (TPSU), met with Lindsay, who oversees Human Resources at her organization.  Lindsay is responsible for approximately 3,200 employees – in her role as HR Generalist. One of the challenges her firm experiences with automatic enrollment occurs during the passing of payroll data for the auto enrollment of the newly hired employees. The company has provided automatic enrollment to their employees for over 5 years, and although the process is well-established at the organization, they continue to use follow-up processes and reports to make certain that no employees fail to be enrolled via Automatic enrollment.

Full Transcript Here

Fred Barstein:
Fred Barstein with 401k TV and I am here with Lindsey.

Lindsay:
Yes, Lindsay.

Fred Barstein:
Thank you. Welcome, Lindsay.

Lindsay:
Thank you having me.

Fred Barstein:
And okay if we ask you a few questions?

Lindsay:
Sure.

Fred Barstein:
Okay. Before we do that, why don’t you just tell us a little bit about your role, the size of your organization.

Lindsay:
There is 3,200 employees that we have and we, I work as the HR generalist so I do payroll benefits and all HR.

Fred Barstein:
You do everything, lunch, dinner, right? So one of the things you discussed was you started automatic enrollment, right?

Lindsay:
Yes.

Fred Barstein:
How long ago was that?

Lindsay:
I believe since the plan started, so before my time. I’ve been with the company five years.

Fred Barstein:
Okay. So more than five years ago. Congratulations. But you bring up it’s not a panacea. There are some issues when you get to automatic enrollment. And why don’t you explain some of those so we can learn.

Lindsay:
So we do an auto enrollment and we have issues because we have to run reports because it’s not completely automated. We have a feed file that goes over from our payroll system to our Fidelity and they and everything, but we never did one back and forth. And the feed file doesn’t have when the employees are eligible for auto enrollment. So we send a service request twice a month to them saying these are employees that-

Fred Barstein:
You have to do that.

Lindsay:
Yes, that are, need to be auto enrolled.

Fred Barstein:
And you can’t forget anyone, right?

Lindsay:
No. So we run reports every couple of weeks to make sure we don’t miss anybody and keep an ongoing file of all possible employees and remove them once they term and…

Fred Barstein:
Be nicer if you outsource that to, right?

Lindsay:
Yes.

Fred Barstein:
To have 180, 360 degrees.

Lindsay:
We should be doing it shortly, so…

Fred Barstein:
You will be.

Lindsay:
Yeah, so…

Fred Barstein:
So yeah, it’s a good lesson to say make sure your payroll and record keeper before or as you’re thinking about doing automatic enrollment. So you’re going to get that done quickly, right? But even the biggest record keepers like Fidelity, right? It still is an issue.

Lindsay:
Well, and during our talk and everything, one of the other companies, they said that they had issues with the person that they did their auto enrollment and everything. They worried that sometimes the people weren’t getting their documentation and everything and people didn’t know about their enrollment opportunities. And so they weren’t aware of investments and whatnot. So they didn’t get the welcome booklet.

Fred Barstein:
They didn’t activate.

Lindsay:
Yeah. And so that was an issue, too. So you have to, even if you completely automate it, you have to remember to keep track of it and make sure that everybody’s getting auto enrolled even if it’s completely and utterly automated.

Fred Barstein:
So final question, a couple of things you learned here that you may want to try to take back?

Lindsay:
Doing documentation.

Fred Barstein:
Implementing.

Lindsay:
Yeah, we’re going to try to do the auto increase and everything, so…

Fred Barstein:
Auto escalation.

Lindsay:
The auto escalations. So we’re going to try to do that. We’re combining two companies’ plans right now. So it’s just working out all the details and everything. So we’re working on that. But the auto escalation is definitely something and documentation of how we’re doing everything and the minutes during our investment meetings, so…

Fred Barstein:
Great. Well, good. Well, congratulations. Thank you for coming. Hopefully you enjoyed TPHU.

Lindsay:
Yes, I did.

Fred Barstein:
Very good. And thank you for watching 401k TV. Please stay tuned.

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