Navigating Employee Benefits & Retirement Plans During Acquisitions
Expanding through acquisitions allows companies to scale quickly, but it also brings significant challenges, particularly in managing employee benefits and retirement plans. Ensuring seamless integration of new employees requires careful attention to the continuity and alignment of retirement benefits. For instance, differences in plan design, contribution levels, and vesting schedules between the acquiring company and the acquired organization must be reconciled. Employees from the acquired company may have 401(k) plans with unique features or fee structures, necessitating a thorough review to meet fiduciary obligations and preserve participant value.
Acquisitions also provide a chance to reevaluate and enhance benefit offerings. A unified and competitive retirement plan can serve as a powerful tool for attracting and retaining talent while signaling the company’s commitment to its workforce. However, navigating this process involves overcoming challenges such as adhering to ERISA and other regulatory requirements, consolidating legacy benefit obligations, and ensuring effective employee communication. By leveraging expert guidance and proactive planning, businesses can streamline transitions, ensuring retirement plans integrate seamlessly while supporting a stronger, more unified workforce.
At a recent TPSU program on the campus of Florida Atlantic University, Christopher, Vice President of Human Resources for a 1,200-employee company, discussed the complexities of managing retirement plans during acquisitions. His company inherited multiple retirement plans with varying policies, creating significant hurdles in consolidating them into a cohesive structure. Inconsistent record-keeping added to the challenge, requiring audits to resolve discrepancies. Christopher emphasized the critical role of timely and transparent communication during transitions, ensuring employees fully understand and adapt to changes in their retirement plans.
Read the Full Transcript Here:
Fred Barstein:
Greetings. This is Fred Barstein. I’m the CEO and founder of TPSU, TRAU, and 401kTV. I just completed a TPSU program here on campus at Florida Atlantic University, and I’m here with Christopher. Welcome, Christopher.
Christopher:
Thank you.
Fred Barstein:
Okay if we ask you a few questions?
Christopher:
Yes.
Fred Barstein:
Okay. Before we start, tell us a little… Your name and how many employees and the role at your organization?
Christopher:
My name is Christopher, our company has 1200 employees throughout the US, and I’m the Vice President of Human Resources.
Fred Barstein:
Very good. So Christopher, you said your company grew through acquisitions and you inherited and took over a lot of different retirement plans. What are some of the challenges in doing that?
Christopher:
Yeah, usually the challenges have been that each company is doing something different and you’re trying to consolidate all these different plans into one plan that doesn’t take away from what one employee received at one company and hopefully benefits another company… The employee from a different company. So you’re trying to make everybody happy when you know that’s not always possible. And also challenges were just that, because they’re all structured differently and they’re all different sizes of companies, you also have the record-keeping that some did a great job and some not as well. So we’re reviewing everything and going back and doing audits from previous years when there’s… You’re looking at previous systems, you’re looking at record-keeping that wasn’t there, or employees that are no longer there as well. So there’s always been a mixed bag.
Fred Barstein:
And you have to terminate the other plan, right, before-
Christopher:
Correct.
Fred Barstein:
And then get on and do that.
Christopher:
Right. So providing the appropriate notice to employees, as well, of the changes that are coming.
Fred Barstein:
Final question. A couple of things you learned here, and why should somebody attend this program? Because it’s a day out of your life.
Christopher:
Sure, of course. Well, I actually heard about this from one of my employees that attended this very session a few months back. She had a lot of positive things to say about it and I take her opinion very highly. So she recommended it and so I took some time while I was in town to attend. I thought that it was really good just to get to know some of the other individuals and other companies in the market. From a networking standpoint alone, that was great. But also really to see, okay, what they’re doing and how there’s companies that are similar size and varying in sizes that are really experiencing the same challenges that we are.
One of our big problems is that we have very low engagement, and what can we do to increase that engagement? And some of the things that we’ve been toying with some previous companies here have already gone through it. So we’re able to find out what their experiences were and see how that aligns with some of the ideas that were mentioned during today’s session.
Fred Barstein:
Great. Thank you. Thanks for attending.
Christopher:
Sure.
Fred Barstein:
And thank you for watching 401kTV. Please stay tuned.