Evaluating Workplace Evaluating Workplace Education for New Hires - - PowerPoint PPT Presentation

Evaluating Workplace Evaluating Workplace Education for New Hires Education for New Hires

Robert L. Clark Robert L. Clark Melinda Sandler Morrill Melinda Sandler Morrill North Carolina State University North Carolina State University North Carolina State University North Carolina State University

Overview Overview Overview Overview

• This project documents participation and

This project documents participation and contribution rates of newly hired workers in

• ptional retirement savings programs
• ptional retirement savings programs.

G l d i h i f i d l

• Goal: to determine how information and plan

structure affects participation.

Overview: Year One Overview: Year One Overview: Year One Overview: Year One

• Partnered with six large national employers

Partnered with six large, national employers.

• Reviewed plan structure and current

information provision information provision.

• Gathered data on plan participation for

k hi d i 2008 d 2009 h workers hired in 2008 and 2009 at each employer.

Employer Partners: BB&T Employer Partners: BB&T Employer Partners: BB&T Employer Partners: BB&T

• Plan Type:

– Eligible on 1st day of employment. – Optional defined contribution S l h DB l – Supplements the DB plan

• Match:

– Qualify: 1,000 hours and 1 year of service – 100% on first 6%

• Information:

– Benefits discussed at orientation and annual review.

Employer Partners: Progress Energy Employer Partners: Progress Energy Employer Partners: Progress Energy Employer Partners: Progress Energy

• Plan Type:

Plan Type:

– Eligible on 1st day of employment. – Optional defined contribution p – Supplements the DB plan

• Match:

Match:

– Qualify: 1st day of employment – 100% on first 6%

• Information:

– Orientation only. Orientation only.

Employer Partners: Pepsi Bottling Employer Partners: Pepsi Bottling Ventures, LLC Ventures, LLC

• Plan Type:

yp

– Auto‐enroll – Eligible after 60 days of employment. O ti l d fi d t ib ti – Optional defined contribution – Only retirement savings plan (no DB plan)

• Match:

Match:

– Qualify: 1,000 hours and 1 year of service – 100% on first 4%, 50% on next 2%

• Information:

– Orientation only.

Employer Partners: Martin Marietta Employer Partners: Martin Marietta l l Materials Materials

• Plan Type:

yp

– Auto‐enroll – Eligible on 1st day of employment. O ti l d fi d t ib ti – Optional defined contribution – Supplements the DB plan

• Match:

Match:

– Qualify: 6 months of service – 50% on first 7%

• Information:

– At orientation, annually sends plan information.

Employer Partners: North Carolina Employer Partners: North Carolina State University State University

• Plan Type:

Plan Type:

– Eligible on 1st day of employment. Optional defined contribution 401(k) 403(b) 457 – Optional defined contribution 401(k), 403(b), 457 – Supplements the DB plan

N M t h

• No Match
• Information:

– At orientation, emails sent annually by provider,

• ptional workshops.

Employer Partners: Williams Employer Partners: Williams Employer Partners: Williams Employer Partners: Williams

• Plan Type:

a ype:

– Eligible on 1st day of employment. – Optional defined contribution – Supplements the DB plan

• Match:

– Eligible on 1st day of employment – 100% on first 6%

f i

• Information:

– At orientation, email reminders sent by staff (ad‐hoc), emails sent by plan provider emails sent by plan provider.

Background on Employer Background on Employer‐Partners Partners Background on Employer Background on Employer Partners Partners

• Two employers have opt‐out plans

Two employers have opt out plans.

• All but one offer an employer match.

V i ti i t f t h d i i – Variation in amount of match and in service requirements to qualify for match.

All b t h DB l i dditi t th

• All but one have a DB plan in addition to the

DC plan.

Preliminary Data Preliminary Data Preliminary Data Preliminary Data

• Administrative data on approx 10K individuals

Administrative data on approx. 10K individuals hired in 2008 and 2009 and currently employed in Summer 2010 employed in Summer 2010.

• All employers:

D t f hi d d t f bi th t – Date of hire, gender, date of birth, current participation level.

Additi l i f ti

• Additional information:

– Salary, date contributions began, job classification

Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1

• Research Finding 1: The employers provide

Research Finding 1: The employers provide extensive information at orientation, but further efforts to reach workers are mostly ad‐ further efforts to reach workers are mostly ad hoc.

Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1

• Research Finding 2: Employees are

Research Finding 2: Employees are responsive to match incentives.

Williams: Deferral Percentages for Individuals Hired in 2009 as

• f May 28, 2010

98

100

Williams: Deferral Percentages for 2009 New Hires

• f May 28, 2010

(6% match)

60 80 requency

4 5 7 14 9 6 18

20 40 F

4 1

2 4 6 8 10 401k Deferral

87

Progress Energy: Deferral Percentages for 2009 New Hires

Progress Energy: Deferral Percentages for Individuals Hired in 2009 as of July 6, 2010.

60 80 ncy

(6% match)

19

20 40 Freque

3 1 8 4 7 8 7 2 1 6 3 2 2 3 3 1 1 1 2

5 10 15 20 25 401k Deferral

Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1

• Research Finding 3: The date when the

Research Finding 3: The date when the employer match begins should be an important “teachable moment” for employers important teachable moment for employers to reach out to employees

BB&T: Time until Sign‐up for Individuals Hired in 2008 & 2009.

40% s Participating

BB&T: Time until Sign-up

(match begins after 1 year)

20% 30% 08/2009 New Hires 10% Percentage of 200 90 90 365 80% icipating

Williams: Time until Sign-up

P 90 90 365 Number of days between date of hire and date of participation

Percent of 2008 Hires (Cumulative) Percent of 2009 Hires (Cumulative)

WLM: Time until Sign‐up for Individuals Hired in 2008 & 2009

40% 60% 09 New Hires Part

Individuals Hired in 2008 & 2009. (match begins immediately)

20% rcent of 2008/200 Per 30 90 365 Number of days between date of hire and date of participation

Percent of2008 Hires (Cumulative) Percent of2009 Hires (Cumulative)

Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1

• Research Finding 4: Auto‐enroll programs

Research Finding 4: Auto enroll programs increase retirement savings plan participation considerably considerably.

96 1%

Percent of Employees Participating as of Summer 2010 by Year of Hire

52.1% 70.1% 76.3% 94.1% 91.7% 52.6% 61.2% 91.9% 96.1% 50% 60% 70% 80% 90% 100% 14.3% 6.9% 32.0% 0% 10% 20% 30% 40% 50% NCSU BB&T PGN WLM MMM PBV Average Plan Participation: 2008 New Hires Average Plan Participation: 2009 New Hires

Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1

• Research Finding 5: There is little decay in

Research Finding 5: There is little decay in participation rates over time for employers using auto‐enrollment using auto enrollment.

1 rticipating

MMM: % Participating in Summer 2010 by Quarter Hired

.6 .8 009 New Hires Pa .2 .4 entage of 2008/20 Perce 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 1 ing

PBV: % Participating in Summer 2010 by Quarter Hired

6 .8 ew Hires Participati .4 .6 e of 2008/2009 Ne .2 Percentage 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4

Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1

• Research Finding 6: There is evidence that

Research Finding 6: There is evidence that persons automatically enrolled in supplemental plans have lower contribution supplemental plans have lower contribution rates that are concentrated at the default level level.

108

100

2008 New Hire Deferral Percentage (as of July 3, 2010)

60 80 requency

Martin Marietta Materials: Deferral Percentages

13 9 5 24 6

20 40 Fr

Deferral Percentages Auto‐enroll at 2% and increases annually by 1%

58

2009 New Hire Deferral Percentage as of (July 3, 2010)

2 2 5 1 6

2 4 6 8 10 401k Deferral

58 40

40 60 cy 20 Frequenc

3 7 3 9 5

2 4 6 8 10 401k Deferral

Average Deferral Percentages for 2008 New Hires, as of Summer 2010

Auto‐Enroll Opt‐In

as of Summer 2010

p MMM PBV BB&T PGN WLM Participation Rate 94.1% 91.7% 52.1% 70.1% 76.3% Average Deferral Percentage for Active P ti i t 4.36% 3.83% 6.35% 8.16% 6.54% Participants Average Deferral Percentage (including zeros) 4.11% 3.51% 3.29% 5.72% 5.04% zeros).

Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1 Preliminary Findings from Year 1

• Research Finding 7:

Research Finding 7:

• Standard opt‐in plans:

L ll t t f d f l – Lower enrollment rates for younger and female workers.

O t t l

• Opt‐out plans:

– No significant differences in plan participation for ith t diti ll l ti i ti t groups with traditionally low participation rates.

PBV (opt out) Williams BB&T

Sample: Workers hired in 2008 or 2009 Dependent Variable: Participation within 90 Days

PBV (opt‐out) Williams BB&T Hired in 2008 ‐0.050** [0.017] Hired in 2008 0.130 [0.035]** 0.003 [0.012] Female ‐0.022 [0.031] Female ‐0.091 [0.037]* ‐0.160 [0.009]** Age when Hired: Age when Hired: Age when Hired: Age when Hired: Age 18‐24 ‐0.006 [0.020] Age 18‐24 ‐0.057 [0.045] ‐0.041 [0.014]** Age 35‐44 ‐0.004 [0.023] Age 35‐44 0.092 [0.047]* 0.040 [0.016]* Age 45‐54 ‐0.014 [0.031] Age 45‐54 0.089 [0.050] 0.101 [0.018]** Age 55‐65 ‐0.015 [0.061] Age 55‐65 0.164 [0.075]* 0.064 [0.027]* Salary (in thousands): 20‐24 ‐0.011 [0.020] 25‐29 ‐0.006 [0.033] 30‐39 ‐0.004 [0.025] 40‐59 0.042 [0.039] 60+ 0.071 [0.046] Observations 783 Observations 840 4,959 Avg Participation Rate 94.5% Avg Participation Rate 59.3% 20.4%

* significant at 5%, ** significant at 1%.

Summary of Main Findings Summary of Main Findings Summary of Main Findings Summary of Main Findings

• 1. Employees respond to match incentives.
• 1. Employees respond to match incentives.
• 2. Employers with opt‐in defaults have lower

participation rates among younger and participation rates among younger and female workers.

• 3. Auto‐enroll programs:
• 3. Auto enroll programs:

– Increase retirement savings plan participation. – Employees contribution at (lower) default levels. p y ( ) – No significant differences by age, gender, or salary.

Plans for Year 2 of Project Plans for Year 2 of Project Plans for Year 2 of Project Plans for Year 2 of Project

• Survey non‐participants

Survey non participants.

• Include with survey information about the

plan and measure efficacy of intervention plan and measure efficacy of intervention.

• Vary information content and timing within

l employers.