Client Service June 9, 2017

PSNC 2017: Advanced Plan Design

Kicking off the 2017 PLANSPONSOR National Conference, the panel discussed key plan design features that can boost participant engagement.
 
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Among an array of first-day sessions at the 2017 PLANSPONSOR National Conference was one panel focused on plan design elements, including automatic enrollment features and online tools.

Kicking off the panel, live polling from plan sponsors disclosed that top industry concerns include low-rate participant saving and trouble retiring on time—or even at all. Other poll results found that just over half—51%—of sponsors do not offer a true-up match in their plan design, whereas 44% do, and 6% don’t know.

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While 69% of plan sponsors fail to stretch their matching contributions, live polling concluded that efforts at implementing wellness features are effective, as 47% revealed that both one-on-one and online participant advice are offered to workers. On automatic escalation and re-enrollment, the poll revealed that 17% of sponsors utilize both features on a one-time basis, and 15% do so on a recurring basis.

According to Nate Nevas, director of global financial benefits and administration at Pitney Bowes (PB), and a panelist for the session, however, re-enrollment has yet to be integrated into Pitney Bowes’ plan. Because we have a legacy defined benefit [DB] plan, for those not participating as fully, it’s because of the pension plan,” he said.

Pitney Bowes doesn’t necessarily need a re-enrollment option. At a participation rate of 86.5%, the global eCommerce solution company initially provided a 2% default automatic enrollment, then raised it to 3%. When PB introduced automatic increase, the default auto-enrollment jumped to 6%. Today, all workers receive auto-enrollment and auto-increase at the start of employment, in an effort to ensure maximum participant saving.

“Our philosophy is we’re getting at them when they come in the door,” Nevas said.

At Owens-Illinois (O-I), Etta Strong, director of N.A. compensation and benefits, and also a panelist for the session, revealed that, even with auto-enrollment set at 4%, most O-I employees neglected to participate, because of existing DB plans. In 2015, O-I implemented its first re-enrollment sweep, and had another this spring.

The reaction?

“Surprisingly, very minimal noise or reaction, and it’s obviously sticking,” she said. O-I now has a 97% participation rate. The company employs a mandatory auto-escalation feature, increased at 1% each year to a maximum of 20%.

On financial planning services, Nevas noted that internet-based tools can connect a widespread company into one tight-knit entity, while being easily accessible to all. PB’s tool, named PB Project Living, assists employees on a nationwide scale and offers information on benefits, 401(k), pension plans and even personal health.

“Financial health, emotional health, physical health, they’re all interconnected,” he said.

Unlike Pitney Bowes, O-I utilizes in-person or calling features, including one-on-one advice and group meetings for the 19 plans. “Using online tools isn’t quite as effective, so being able to utilize calls is important to us,” Strong says.

Additionally, the company provides on-site meetings at least once a year with advisers from Pearl Street Investment Management visiting monthly. In terms of demographics, new hires, including Millennial and younger workers, tend to engage in one-on-one, personal meetings, she observed.

Nevas stressed the value these latest plan features can offer. For plan sponsors, not implementing them  does workers a disservice, he suggested. “There’s this inertia that can work in so many different ways. When we don’t use auto features, it goes against our employees.”

Client Service June 9, 2017

PSNC 2017: Using HSAs Effectively

What plan sponsors should know about health savings accounts (HSAs) before implementing them.
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Day Two of the PLANSPONSOR National Conference, in Washington, D.C., included a panel discussing the relationship between health savings accounts (HSAs) and defined contribution (DC) plans, as well as why high-deductible health plans (HDHPs)—when paired with HSAs—can be good for employers.

On the future of HSAs in conjunction with retirement planning, Jania Stout, practice leader and co-founder of Fiduciary Plan Advisors, said provision of the accounts as a service for employees continues to steadily rise, and more and more employees are latching on. “It’s here to stay, and it’s growing,” she said. Of all of Stout’s clients, 80% utilize an HSA account, while the remaining 20% are seriously considering it.

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While Stout’s clients have been embracing the service, the same cannot be said for other sponsors or providers. During the panel, she cited a United Benefits Advisers study detailing HSA enrollment among participants—a mere 17%. “Your health care expense is going to be your most important expense,” she said. “I don’t think individuals realize how much money they’ll need in health care.”

Introduced in 2004, HSAs have only become a focus for employers in the last three to four years, noted Steven Mindy, senior associate for Alston & Bird LLP. Even if the account service is consistently pushed by an employer, Mindy said, most participants will reason applying only the lowest premium to their plan.

In order to engage participants, then, Stout encouraged sponsors to construct handbooks or guides on HSA education and beneficial information. More than general material, it’s the presentation that’s key to motivating employees to participate, she said. “A lot of times it’s not math; it’s just really how you present it to people,” she said.

Additionally, Stout observed, when plan sponsors host 401(k) meetings, this can sway employees to enroll in an HSA. She emphasized how consistently calling it a “savings account” can drive participation, as the word “savings” is drilled into employees’ minds.

NEXT: Flexibility of HSAs

On the subject of joining HSAs with HDHPs, Mindy pointed out that HSAs can be fairly flexible for participants. “People can move their money around however they want,” he said. “The employer must set it up; it’s a process. He explained that HSAs may be counted as a medical expense and, if used as a health care expense, can be subject to exempted tax. “With an HSA, you don’t have to worry about hardship solutions; you don’t have to worry about a loan,” he said.

However, Mindy said, for those on Medicare, contributions to HSAs are not allowed.

While Stout and Mindy encouraged plan sponsors to provide general information and educational materials on HSAs, both warned about crossing the line between employer and fiduciary, where sponsors can get themselves into trouble.

“Our role is changing now,” Stout said. “Now we’re taking more charge with the participants in the investment side as well.”

Mindy stressed that giving personal advice to participants may land some employers in litigation suits. “You have to watch your materials closely to make sure you don’t cross the line and say, ‘You should do this,” he said. “Have counsel review this and make sure it’s just general information.”

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