It can be difficult to get senior management engaged in their 401k plan. Unlike a pension or defined benefit (DB) plan, if the rules are followed, there’s limited liability even if the 401k plan is underfunded. The stakes are getting higher with the new DOL fiduciary rule and senior management, concerned about the long term viability of the company, starting to see the benefit of helping people to be able to retire when it’s right for them and the company. (Watch Hugh O’Toole video on how to engage senior management.) At a TPSU program held at Valparaiso University, the HR manager at a 740-employee company discusses how she gets her senior managers engaged in their 401k plan.
The HR manager thinks it’s important that the rank and file see that the company’s leadership is engaged with their 401k plan which shows the importance that the company places on the benefit. Though higher earners may need to incorporate other vehicles to save for retirement, the 401k plan can be an important part of their overall plan making them interested not only in maximizing their contributions but also overseeing which investments are being offered.
The 740 Midwest company Investment Committee includes the CFO, EVP of Operations, HR and finance executives as well as employees from various departments and meets annually. The HR manager believes that they get good participation in their 401k plan because employees see that their peers are involved as well as senior management.
Though 401k and 403b litigation and new fiduciary standards are getting the attention of senior management, it’s becoming accepted practice that people should have access to a retirement savings plan at work. The next step is making those retirement plans more effective which starts with the Ideal Plan incorporating auto features followed by employee engagement all of which takes support by senior managers.
