Each month NAGDCA highlights a new topic and shares relevant information and resources with our members. This month we’re highlighting the topic of Plan Features and below you’ll find links to resources and information related to the topic. Keep an eye out for additional resources in our e-newsletter, NAGDCA Now. We’ll also add the resources to this post throughout the month to allow you to access the curated list from the website at your convenience.
NAGDCA Best Practice Guide – Plan Features
Click here to access the full Plan Design guide.
San Mateo County Deferred Compensation Plan
In 2016, San Mateo County implemented a provision to automatically enroll new hires at a 1% deferral rate. As a result of this effort, the County witnessed participation rates increase dramatically, from 62% to 82%, in a span of three years. This was a great success, however the automatic enrollment provision only applied to new hires and these new hires were saving at 1% of pay (far lower than recommended savings rates). Looking at the plan data, the County decided there was more we could do to help employees save adequately for retirement. We decided to make some additional plan design enhancements in 2019.
To boost participation and savings rates even further, the County negotiated with various collective bargaining units and management groups to implement an automatic enrollment and an auto-escalate feature (from 1% – 5%) for current non-saving employees and those saving under 5% of pay. We believe these new provisions will help County employees get even closer to reaching their retirement goals.
Click here for the County’s story of overcoming obstacles to implement automatic plan features for their participants.
The Effect of Employer Matching and Defaults on Federal Workers’ TSP Savings Behavior – Congressional Budget Office
“This study uses two sources of exogenous variation stemming from policy changes to the retirement benefits of federal workers to estimate the effects of matching and defaults on their savings behavior. We estimate the effect of introducing an employer match and the effect of instituting automatic enrollment on workers’ participation, contributions, and portfolio allocations. We use a treatment-control framework on adjacent cohorts of recently hired workers.”
Click here for information about the study and findings.