Build­ing a bet­ter 401(k)

Af­ter lis­ten­ing to em­ployee con­cerns over Op­tanix’s re­tire­ment plan, Jodi Bud­nick made it her mis­sion to up­grade the pro­gram and help em­ploy­ees save more for their post-work years.

Employee Benefit News - - Contents -

Af­ter lis­ten­ing to em­ployee con­cerns over Op­tanix’s re­tire­ment plan, Jodi Bud­nick made it her mis­sion to up­grade the pro­gram and help em­ploy­ees save more for their post-work years.

“With the in­tro­duc­tion of the au­to­matic en­roll­ment and re-en­roll­ment plan pro­vi­sions, nearly all em­ploy­ees will be sav­ing to­ward re­tire­ment as well as re­ceiv­ing em­ployer match­ing con­tri­bu­tions.” Af­ter com­plet­ing a com­pet­i­tive anal­y­sis, Bud­nick cre­ated a pro­posal for the com­pany’s lead­er­ship, backed up with lots of data, about the ben­e­fits of hav­ing a strong re­tire­ment plan.

When Jodi Bud­nick joined Op­tanix in Jan­uary of this year as the com­pany’s se­nior vice pres­i­dent of tal­ent, she en­coun­tered a big prob­lem: The com­pany was strug­gling to at­tract and re­tain tal­ent.

So one of the first things she did in her new role for the New York-based tech­nol­ogy com­pany was meet with em­ploy­ees to get a bet­ter un­der­stand­ing of who they are, what they do, the cul­ture of the com­pany and what they are look­ing for.

A re­cur­ring theme that kept crop­ping up in nu­mer­ous one-on-one ses­sions and fo­cus groups: Em­ploy­ees were un­happy with the com­pany’s 401(k) plan. It didn’t pro­vide a com­pany match, and its em­ployee par­tic­i­pa­tion rate was only be­tween 35% and 40%, ac­cord­ing to Bud­nick.

“We did not have a very pro­gres­sive plan,” she says. “My key take­away from this is we [needed to] slowly evolve it to be­come a pro­gram that in­cents em­ploy­ees to save more for re­tire­ment and help them to im­prove their re­tire­ment readi­ness.”

Af­ter com­plet­ing a com­pet­i­tive anal­y­sis, Bud­nick cre­ated a pro­posal for the com­pany’s lead­er­ship, backed up with lots of data, about the ben­e­fits of hav­ing a strong re­tire­ment plan. Lead­er­ship ap­proved, and a new plan was born.

The com­pany’s new re­tire­ment pro­gram, which is rolling out Jan. 1, is ex­pected to dou­ble em­ployee par­tic­i­pa­tion in the plan, in large part be­cause it of­fers au­to­matic en­roll­ment to all new hires and au­to­matic re-en­roll­ment to all of the com­pany’s 325 em­ploy­ees. It is also im­ple­ment­ing a 50-centson-the-dol­lar com­pany match­ing con­tri­bu­tion up to 6% of pay as an added in­cen­tive with a twoyear vest­ing sched­ule.

Bud­nick adds that one of the com­pany’s fidu­ciary re­spon­si­bil­i­ties is to “help em­ploy­ees be pre­pared for re­tire­ment, whether they want to or not, or whether they know that or not. That is one of our re­spon­si­bil­i­ties.”

It’s a good time to reimag­ine the plan, Bud­nick says. Though Op­tanix has been around for 18 years, it was bought out sev­eral years ago by a pri­vate eq­uity firm, Fran­cisco Part­ners.

“We have a re­newed strat­egy and a new lead­er­ship team, so while we’ve been around 18 years, we are kind of like a startup,” says Bud­nick, whose com­pany pro­vides an IT op­er­a­tions man­age­ment soft­ware plat­form and re­lated ser­vices to some of the world’s top banks, me­dia and tech­nol­ogy com­pa­nies.

Arielle So­bel, se­nior pub­lic re­la­tions man­ager at Bet­ter­ment for Busi­ness, the com­pany’s 401(k) provider, says that Bud­nick and her team at Op­tanix, wanted their em­ploy­ees to re­ceive on-de­mand dig­i­tal ad­vice to bol­ster fi­nan­cial well­ness in the work­place.

“Jodi and her team rec­og­nize that Op­tanix’s 401(k) plan is an in­te­gral part of their em­ploy­ees’ over­all fi­nan­cial well­ness,” So­bel says. “Jodi is laser-fo­cused on bring­ing the best pos­si­ble re­tire­ment ad­vice and plan­ning tools to Op­tanix and care­fully se­lect­ing 401(k) plan fea­tures that will set em­ploy­ees up for suc­cess.”

In ad­di­tion to the more ro­bust 401(k) plan, Op­tanix will in­tro­duce a fi­nan­cial well­ness ed­u­ca­tion pro­gram for em­ploy­ees be­gin­ning in the fall.

“Jodi’s will­ing­ness to think crit­i­cally about Op­tanix’s re­tire­ment plan of­fer­ing and con­sis­tently do what’s best for her or­ga­ni­za­tion is just one ex­am­ple of her lead­er­ship in the ben­e­fits space,” So­bel says.

Bet­ting on ben­e­fits

Bud­nick says that the one im­por­tant thing hu­man re­sources pro­fes­sion­als should keep in mind when as­sess­ing their own ben­e­fits pack­ages is that changes don’t hap­pen overnight. You have to con­tin­u­ously build upon what you al­ready have.

Op­tanix is scru­ti­niz­ing all of its ben­e­fits to see what is work­ing and what isn’t, but it made its 401(k) plan a pri­or­ity this year.

“It is a large fi­nan­cial in­vest­ment, a large cost for our com­pany, but we felt it was ab­so­lutely nec­es­sary,” Bud­nick says, adding that she also is look­ing at the com­pany’s health­care ben­e­fits to see if they can en­hance what is al­ready of­fered.

Be­cause Op­tanix is a tech­nol­ogy com­pany it­self, it made sense for it to choose a com­pany like Bet­ter­ment to pro­vide its 401(k) plan. The com­pany’s sys­tem is en­tirely au­to­mated, and ev­ery em­ployee re­tire­ment ac­count is essen­tially a man­aged ac­count. Only the re­bal­anc­ing and tweak­ing of ac­counts is done by the com­puter.

Em­ploy­ees have been very re­cep­tive to the changes that are com­ing to their re­tire­ment plans at the be­gin­ning of the year, says Bud­nick.

“We com­mu­ni­cated it in a town hall a cou­ple of months ago, and they had a very pos­i­tive re­ac­tion,” she says. “I think, for me, the im­por­tant piece is they felt heard. They felt like we lis­tened to them be­cause we are lis­ten­ing to them.”

She adds that once a new pro­gram is im­ple­mented, a com­pany has to con­tin­u­ally keep an eye on it to make sure it is do­ing what it was meant to do.

“You don’t just launch a pro­gram and let it sit,” Bud­nick says.

So­bel says that of the 374 ac­tive and el­i­gi­ble em­ploy­ees in Op­tanix’s 401(k) plan, 128 of them have a sav­ings rate of 5% of com­pen­sa­tion or more. The aver­age ten­ure of em­ploy­ees who have con­trib­uted to the plan is 7.1 years, vs. 4.6 years for those who do not con­trib­ute.

“With the in­tro­duc­tion of the au­to­matic en­roll­ment and re-en­roll­ment plan pro­vi­sions, nearly all em­ploy­ees will be sav­ing to­ward re­tire­ment as well as re­ceiv­ing em­ployer match­ing con­tri­bu­tions,” So­bel says. “Ad­di­tion­ally, it’s pro­jected that the num­ber of em­ploy­ees in­vest­ing at ap­pro­pri­ate risk lev­els will more than dou­ble as a re­sult of the per­son­al­ized ad­vice pro­vided by Bet­ter­ment for each em­ployee.”

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