Managing retirement benefits at a retail company is challenging with high turnover and low income workers. There are also issues tracking hours of temporary workers. A large Atlanta based fast-food chain at a TPSU event held at the University of Georgia discusses those challenges as well as ways to manage and incent more employees to save for retirement.
One of the big issues for all types of companies is tracking hours of temporary workers because when they reach 1000 hours they become legible for the company’s retirement plans. Some companies have more lenient rules.
If the part-time worker has put in at least 1000 hours over the course of the plan year, which equates to about 19 hours per week, then they are eligible to participate in the DC plan. Non-resident aliens and union workers may be excluded. Plans can include part-time workers with less than 1000 hours but many times the plan sponsor’s administrative personnel may not be aware of these more lenient restrictions in the plan documents when they inherit the plan.
At a TPSU program held at the University of Alabama at Huntsville, the plan sponsor had found out that the plan had been improperly excluding part time workers which meant big fines along a voluntary correction with the DOL, enrolling eligible part time workers, and the expense of hiring an ERISA attorney.
The Atlanta based fast-food chain relies on their record keeper to track hours of temp workers to make sure no one is improperly excluded. The company uses a generous match which vests immediately to incent workers to join the plan which has been a success even with low-income employees more likely to stay at the company.
Dealing with the new economy where people change jobs frequently, work part-time or are even part of the gig economy means that employers and providers need to find better ways to track, engage and incent these workers. The world is changing – is your retirement plan keeping up?
