A major retailer based in Boston with stores all over the country faced the problem of allowing their highly compensated employees to be able to defer to the max as participation in 401(k) Plan was below 50%. Along with employing a safe harbor plan, the company adopted aspects of the “ideal plan” using auto features to boost that participation rate to well over 90% creating an “ideal” environment at the company.
Retailers face the biggest challenge in getting their employees to save in their 401(k) plan. Transient workers are generally younger and lower paid. Not only do retailers have to constantly rehire and retrain new workers, mid level managers are not able to contribute as much as they would like to their 401(k) plan. The Samsonite benefits manager relayed how he tackled the problem at a TPSU program held at Stonehill College conducted by adjunct lecturer Jim Sampson from Cornerstone Retirement Advisors.
Along with a safe harbor plan, Samsonite instituted auto-enrollment as well as auto escalation boosting participation rates from 50% to 70%. Not satisfied, the company then instituted re-enrollment to get that rate to over 90% participation. A true success story!
The January 2016 TPSU program was the Samsonite’s benefits manager third program where he comes back to learn more and get updates on new laws. Adjunct Lecturer Sampson is famous for teach plan sponsors that auto-enrollment without auto-escalation is like “peanut butter without jelly”. TPSU also advocates for plans to consider re-enrollment. Most employees who did not voluntarily join the DC plan were not making a conscious decision – most are plagued by inertia. If auto-enrollment is good for new employees, why exclude current ones? And even those few that opt out are not saying they never want to join the company’s retirement plan – they just are saying, “not now”.
Samsonite’s benefit manager is a real life example of a knowledgeable, trained and courageous HR professional willing to do something different to help the company and their employees using the “ideal plan” without increase liability, work or cost.
