A Plan With a Purpose
“IT’S TRULY MY mission in life to help one person at a time, so they strive to save more money for retirement,” Jane Hagen convincingly says.
She’s certainly in the right business.
The Senior Vice President and Director of Retirement Plans for Michigan-based Tri-Star Trust counts employee participation in meetings as a key benchmark for how well she’s doing.
“We like to work with companies that feel strongly about educating their employees,” Hagen explains. “We do face-to-face meetings, group meetings and individual meetings, but the level of engagement in employee meetings is so important. It’s about whether they’re asking questions and learning from year to year, because every year we want to bring different topics. We make sure we’re expanding their knowledge, instead of just recommending they increase their contribution.”
“Expanding their knowledge” includes more about what life will look like in retirement.
“It’s about finding your purpose. It’s very hard for people, especially Baby Boomers who have identified themselves with work, to really envision what retirement will look like. Their career has been their identity, it’s what they do each day, the office they go to and the coworkers they communicate with most. But, what will they do when they don’t have that?”
And it’s about more than just their paycheck, she adds.
“We discuss the extra hours per day you’ll have in retirement. ‘How will you fill 16.5-hours per day when you are no longer working?’ It really gets participants to start planning what retirement will look like. They’ve ‘served’ their employer for many years. Who will they serve next?”
One company with whom they’ve found success has been a client for 19 years.
“They traditionally did very well. They had profit sharing and a small match that was 25% up to 4%. We went to them several years ago and said, ‘Okay, let’s change your plan design and implement a stretch match to get your employees to defer more.’ A lot of them were just counting on that nice profit contribution going into their plan each year.”
Because the company wanted to be more “paternal,” they increased their automatic deferral percentage, beginning with a 4% automatic enrollment.
“Every year in the fall, we amend the plan to take it up another percent. Currently, all employees start into the plan at 8%. Our strategy is to keep the auto-enrollment increases until 10%, but now that the law has changed, we may go up to 15%.”
Also, every year they have a “safety day” meeting with employees. The company gives Hagen and her team 20 minutes to present, and they then go around to each table to get people to increase their deferral rates, one by one.
“There are about 275 to 300 employees at that meeting. We could have anywhere from 75 to 125 increases every single year, even though we just automatically put them up another percent a few weeks prior. Employees really just want to know someone cares about them.”
The result is an average deferral of about 9.75% in the plan today, which is way above the national average.
“These employees are just used to it,” Hagen concludes. “Their match right now is 25% up to 9%. The company is thinking about going to 25% up to 10%. It’s just really rewarding for me to see somebody retire and have a pot of gold and know they’re going to be A-Ok in the next chapter of life.”
Jane L. Hagen, AIF, C(k)P, QPFC is Senior Vice President, Director of Retirement Plans with Tri-Star Trust.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
