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The Climate Trust | Investing in People—The Climate Trust Leads with our 401(k)

Investing in People—The Climate Trust Leads with our 401(k)

Events, Trust News

Karena Gruber, The Climate Trust
June 21, 2017

Switch To Match From Automatic Contribution Leads to 100% Participation at Not For Profit

Managing a company’s 401(k) plan is an important and often overlooked aspect of an HR Managers job. Definitely not the thing I talk about at cocktail parties! Yet, this is a key component to anyone wishing to live out their retirement years comfortably.

To help ensure The Climate Trust provides the best resources for our employee’s retirement, I recently attended a 401(k) training put on by The Plan Sponsor University (TPSU). During the day-long workshop, I learned that one of the 401(k) plan changes implemented by The Trust was cited as a best practice to increase employee participation. You can see me talk about it here:

Switch To Match From Automatic Contribution Leads To 100% Participation At Not For Profit

By moving away from a 3% automatic employer contribution, and instead requiring participants to enroll to get the match, The Trust increased our enrollment to 100%. We also increased the amount we matched, giving staff up to 4% for a 5% contribution. This gives all employees additional earnings towards their retirement.

For example, if an employee makes $2,000/month, under the old model they would be putting away $60/month, under the new model, someone maxing out the match would save $180/month. Over 15 years this employee would save an additional $41,800! And, that assumes no increases in contribution amounts.

With this example, it’s pretty clear that there is a huge potential to impact the financial future of your team by offering thoughtful plans that encourage employees to contribute.

Next up, auto-escalation.

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