Case Study: Glens Falls Hospital
For many years, Glens Falls Hospital, a not-for- profit community hospital located in Glens Falls, New York, has been a diligent fiduciary steward of their retirement program, all with a keen eye on the overall goals of their plan: improving plan participation, increasing savings rates, promoting investment diversification, positioning employees for a smooth transition into retirement, and ultimately improving retirement readiness.
Concerned with plan participation and overall match participation, Glens Falls Hospital implemented auto-enrollment at 2% and added auto-escalation at 1% each year (up to 4%) to improve participant outcomes through higher savings rates. At the same time, Glens Falls introduced improved technology and services, including allowing employees to make online salary deferral changes and distributions.
The following year, as part of their regular and ongoing fiduciary process, with the help of their investment advisor and consultant, a recordkeeper search and selection process was conducted. Through the competitive bidding process, Glens Falls Hospital selected a new recordkeeper, resulting in a reduction of administrative costs of about $90,000 annually. The cost savings will increase in conjunction with the growth of plan assets. Glens Falls Hospital also implemented fee levelization, which was viewed as a more fair and equitable method for assessing fees by assuring that all plan participants paid the same pro rata share of administrative fees, regardless of their investment selections.
The move to a new recordkeeper offering significant savings in administrative costs provided a great opportunity to conduct a full investment review and allowed the plan to offer a new lower- cost, best-in-class investment lineup. The enhanced investment lineup:
- Introduced six additional asset classes
- Consolidated duplicative options in several asset classes to eliminate redundancy
- Provided participants access to both actively managed and passively managed investment options
- Replaced the balanced fund as the plans QDIA (Qualified Default Investment Alternative) with a target date series
- Increased the total number of investment options slightly from 19 to 22 (including the target date suite as one option)
- Continued to offer a self-directed brokerage window
The move to a new recordkeeper, coupled with an enhanced investment offering, created the opportunity to launch a communication and education program to drive better participant outcomes. The employee engagement efforts included:
- A holistic approach to retirement planning and financial preparedness – personal financial advice on-site, at all hours; education and counseling in person or via the web; interactive online tools; and access to information take Glens Falls Hospital’s defined contribution retirement program to the next level.
- Easy access to one-on-one personal counseling, elevating the quality of participants’ retirement planning education, with financial advisors on-site to meet with staff at all hours (even night shifts). This initiative resulted in over 600 one-on-one meetings with participants.
- A robust website customized for Glens Falls Hospital participants to use in monitoring and managing their retirement savings.
- A personalized retirement readiness tool that automatically distributes a financial plan annually to all employees. This plan serves as a “road map” to a successful retirement by providing investment advice, savings contribution level recommendations, and desired monthly retirement income goals. The report is designed to help keep employees on track for a successful financial future.
The improvements to Glens Falls Hospital’s plan design and services, coupled with the enhanced employee engagement initiatives, helped Increase employee deferral rates from 5.64% to 5.80%, as well as increase participation rates increase from 87.1% to 88.5%. Additionally, average account balances also increased by more than 10%.
We believe that Glens Falls Hospital has provided strong fiduciary oversight by adopting a fee levelization process, significantly lowering fees, and offering industry-leading solutions to their plan participants. Their constant focus on participants’ retirement readiness has resulted in improved participation and deferral rates, overall proper diversification and increasing account balances, positioning their participants for success.
Note: Plan results are dependent on each plan's circumstances and may not be replicated for all plans.
Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.
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