Paychex, a provider of payroll, human resource and benefits outsourcing services for small and medium-sized businesses, has always had a decent retirement plan. Employees are eligible for the 401(k) employer match after one year of service or 1,000 hours or more of work and the match formula is 50% to a maximum of 8%. The plan also offers immediate vesting.
But in 2014, the company decided to focus more on its employees’ overall financial wellness. Instead of canned communications, it started taking advantage of the different tools and opportunities in the retirement marketplace to help employees better prepare for retirement.
“One of the main things was the lack of preparedness for retirement, retirement readiness. It is great people are deferring a small amount of their paycheck into the plan and getting match money, but are they looking 10, 20 or 30 years down the road to how it will impact their finances?” asks Ron Shaw, retirement program manager for Paychex in Rochester, New York and winner of this year’s Benefits Leadership in Retirement Planning Award. “We have short-term vision.”
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Shaw points out that Paychex’s employee base is fairly young. Most are in their 30s and 40s, so he and his team have tried to get them to look ahead and realize that they are going to stop working one day so they need to figure out if the amount of money they are deferring into their 401(k) plan is enough to sustain them through retirement.
To that end, Shaw helped Paychex institute three programs to complement its already robust retirement plan offerings: ALEX from Jellyvision, the MetLife Retirewise seminar series and a financial fitness challenge.
In September 2012, Paychex rolled out Alex from Jellyvision, an interactive benefits adviser that helps employees better understand the company’s 401(k) plan and the value of saving for retirement. ALEX was integrated into new-hire onboarding, open enrollment, 401(k) match-eligible emails and other communications from the company. And the company promoted Alex as part of its America Saves Week communications last February.
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From August 2014 to early January 2015, ALEX received 1,582 unique visits and 1,992 total visits from Paychex employees. Of those visitors, 74% said they felt they had a better understanding of how their 401(k) plan worked after visiting Alex and 67% of visitors said they were more likely or somewhat more likely to increase their 401(k) contribution because of the program.
“The team there [at Paychex] is incredibly innovative, caring and forward looking,” says Amanda Lannert, CEO of Jellyvision in Chicago, Ill. Paychex is a leader in the industry when it comes to retirement benefits, she adds.
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“It is hard to go to an industry conference where there isn’t someone there giving a keynote or leading a panel discussion on how to close the gap on confusion and how to drive employee engagement,” she says. “I think the world of that team there.”
The right support
Paychex’s focus isn’t just on “getting it done and getting [employees] onboarded, but making sure people understand complicated decisions,” Lannert says. “They really seem to care about making sure that people are making the right decisions and [Paychex is] paying a premium to make sure the right support is there.”
Paychex also implemented many e-learning tools developed by Fidelity, including a Web app called Brain Sharks that gives two- to three-minute pre-recorded investment information sessions on topics such as estate planning, saving for college and debt management.
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Last year, it also implemented MetLife’s Retirewise seminar series, a four-part series of financial seminars to educate employees about the options and resources that are available to them for retirement planning from the early stages to the transition into retirement, Shaw says.
Ninety-seven percent of employees who participated in the program said the series met their expectations and 100% of attendees said they would recommend the workshop.
Paychex rolled out the program at its Rochester headquarters with about 5,000 employees and has since expanded it to other locations nationwide.
“So far, so good. It has been well received and we are getting some pretty good returns from it,” Shaw says.
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The financial fitness challenge, meanwhile, was an online financial education program that was offered to all employees at no cost. The program consisted of five hours of education over the course of five weeks. After the challenge, the company saw a 31% drop in employees’ financial stress levels and 84% of employees either made or said they intended to make changes financially as a result of this program.
Paychex saw a 56% improvement in the number of employees who are setting more of their income aside for retirement savings because of the financial fitness challenge, and it saw a 296% improvement in employees’ confidence in understanding topics related to investing for retirement.
Learning curve
Over the last year and a half, the company has seen its highest level of participation in the company’s 401(k) plan ever, with 70% participation out of almost 14,000 employees. In the match-eligible group, which numbers just over 11,000 employees, there is a 75% participation rate, Shaw says.
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“We’re seeing the fruits of our labor pay off. It has been a learning curve. We did our homework so we are not really surprised that it was well received,” Shaw says. “We know our population pretty well and how they like to be communicated to [and] the shape and form” of communication employees prefer.
Not content to rest on the success he’s already built, Shaw also plans to implement a financial guidance piece and a financial checkup assessment tool within the next 12 months.
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“We don’t want to overload participants with too much information so we have minimal vendors involved. We will keep plugging away and marketing the plan. Again, we really upped our onboarding efforts with promotion of the plan. We built a good foundation. It is a pretty solid start,” he says.
Paula Aven Gladych is a freelance writer based in Denver.
