Bringing Plan and Benefits Administration
In-house…..“Client A”
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Customer Since: 2004
Industry: High-Tech
Eligible Employees: 400
Locations: 2
Headquartered: Boston, MA |
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A high technology company formed as a joint venture between two fortune 500 companies was looking to bring their benefit programs in-house. Up until this point, the company’s benefits had been offered through one of the parent companies. The client’s feeling was that existing plans did not fit appropriately with the company’s younger workforce and would become cost prohibitive in the future. The current retirement package included a defined benefit plan, a defined contribution plan (401(k)) and 5 non-qualified plans. The company was concerned about the communication surrounding the retirement benefits and whether employees fully understood each of the offerings.
Solution: Longfellow designed an RFP to identify a new vendor for record keeping purposes. After reviewing proposals from 9 different vendors, three finalists were selected and an overall winner determined. Longfellow worked with the new vendor and the client to freeze the existing defined benefit plan and re-design a new defined contribution plan. The new 401(k) program contained a “safe harbor” plan design to limit discrimination testing. It also allowed for additional contributions to go to older, more tenured employees as a way to make up for the frozen defined benefit offering.
Longfellow ran a series of educational seminars at all of the client’s locations to educate employees about the changes and explain how the new plans would benefit them. Longfellow also met with employees individually as well as developed custom statements for the older employees who might be more impacted by the freeze to the defined benefit plan.
Longfellow reduced the number of non-qualified plans to just two offerings making it easier for employees to understand and less complicated for the client to administer.
In Summary: Participation in the defined contribution plan increased to nearly 90%. Employees have better access to account information and feel a high degree of satisfaction with the retirement plans. To maintain this trend, the client instituted an investment policy, created an investment committee and meets with Longfellow on a quarterly basis to monitor the funds and manage changes to the plans. Employee educational seminars are offered throughout the year to keep employees up to date on the markets, the investment options and changes in pension legislation.