Data & Research October 20, 2021

Many Participants Are Leaving Money on the Table

Despite significant progress made in recent years, research suggests millions of working Americans are missing out on the full retirement plan match offered by their employer.

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Millions of Americans are not contributing enough to their workplace retirement plan to get the full company match, as a recent study found 12% of employed adults—or as many as 17.5 million working Americans—aren’t contributing enough.

According to a MagnifyMoney survey of 1,233 employed Americans, 59% say their employer offers a retirement saving plan, 34% say their employers do not and 7% did not know if a plan was offered. Those with higher annual household incomes are more likely to work in jobs with employer-sponsored retirement savings plans—78% among those with incomes of $100,000 or more, versus 41% among those with incomes below $35,000, according to the survey.

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Among those respondents whose employers offer plans, 83% say they are currently contributing to the plan, 12% have contributed to it in the past but aren’t doing so currently and 6% have never enrolled.

The survey found there are several reasons employees decide not to contribute to their retirement plans. Thirty-five percent of respondents say they could not afford to contribute to their plan—the top reason. Meanwhile, 17% say they forget to enroll and 12% are waiting until they are older.

Men are more likely than women to work for an employer that offers a retirement saving plan (64% versus 56%), and women were less likely than men to know if their employer offers matching funds (20% of women didn’t know versus 12% of men).

The survey also examined if those who were saving were accumulating enough to last through retirement. Just 20% of respondents said their retirement plan balances have reached $100,000 or more, with significantly more men (30%) than women (11%) in this category. Older generations were more likely to have higher balances in their retirement accounts, with 48% of Baby Boomers and 31% of Generation Xers having a balance of $100,000 or more, versus 9% of Generation Zers and Millennials.

“If your employer offers to match a certain amount of your retirement contributions, that’s a part of your total compensation package,” says Ismat Mangla, MagnifyMoney senior content director. “Matching contributions from your employer will help you save and invest more for retirement. If you don’t contribute enough money to get your employer match, you are literally leaving free money on the table.”

 The full survey results are available here.

Compliance October 20, 2021

Settlement in Dignity Health Church Plan Lawsuit Gets Preliminary Approval

Given a third shot, a judge found the parties finally got the settlement terms right.

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On their third try, the parties in a lawsuit claiming that Dignity Health improperly used the Employee Retirement Income Security Act (ERISA)’s “church plan” exemption to evade ERISA funding and reporting requirements for its defined benefit (DB) plan have been granted preliminary approval of a settlement agreement.

According to the terms of the settlement agreement, Dignity Health will contribute $50 million to the plan for the 2020 plan year and will contribute either another $50 million or the amount of the minimum contribution recommendation calculated by the plan’s actuaries for the 2021 plan year, if it’s greater than $50 million. For calendar years 2022, 2023 and 2024, Dignity Health has agreed to make contributions to the plan in the amount of the minimum contribution recommendation calculated by the plan’s actuaries.

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In addition, the settlement calls for a one-time payment to members of what it calls the “vesting subclass” of participants of $950,000 and a one-time payment to members of what it calls the “PEP Plus claimants” of $825,000.

Among other non-monetary settlement terms, Dignity Health has agreed to make available to plan participants and beneficiaries a summary plan description (SPD), a summary annual report (SAR) and pension benefit statements.

Last June, Judge Jon S. Tigar of the U.S. District Court for the Northern District of California denied for the second time preliminary approval of a proposed settlement agreement. Tigar found an underlying conflict between the vesting subclass and the rest of the class and said he could not find that the vesting group’s interests have been adequately protected.

In his order granting preliminary approval of the newly proposed settlement, Tigar noted that the only material changes in the agreement affect the vesting subclass. According to the court document, the changes to the agreement include subclass certification of the vesting subgroup, a $290,000 increase in money paid to the vesting subclass, and the distribution of funds to subclass members proportionate to their previously accrued benefits under the plan. The agreement also establishes eligibility for subsequent plan participation should a vesting subclass member return to employment with Dignity Health.

In the settlement agreement, the Dignity Health defendants deny any and all allegations of wrongdoing made in the complaint.

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