Tag Archives: Robert Griffith

Employers honored with Save 10 award for helping their employees save for retirement

Save 10 awardees at the Seattle event with their Milliman consultants and special guests Milliman Chairman Ken Mungan and Francis Creighton of Financial Services Roundtable. Photo by Ryan Hart

Twelve employers based in the Pacific Northwest were recognized with the Save 10 award during the 45th annual Milliman Employee Benefits Conference held in Seattle on April 6. The Save 10 award honors their work helping their employees save for retirement.

The Save 10 initiative is a movement to reinforce a “Save 10” rule of thumb, recognizing employers who help their employees to save at least 10% of their income toward retirement. Why Save 10? According to Francis Creighton, Executive Vice President of Government Affairs of Financial Services Roundtable, which sponsors the initiative, 10% is easy to remember and reflects the old adage of saving at least 10% of your income for retirement. While this may not be the ideal contribution rate for everyone, getting employees to save for retirement, and providing employers the tools to allow their employees to do so, remains fundamental.

The Save 10 initiative emphasizes the effectiveness of auto features in retirement plans, such as auto enrollment and auto escalation. Research shows that auto features encourage employees to save, even though they may not remember to sign up and start saving from their hire date. The rate of success in saving increases even more for employees with auto escalation of contribution rates.

Milliman is proud to work with companies that want to provide the best benefits for their employees. Milliman works closely with employers to help provide best-in-class retirement plans for their employees that reflect the philosophy and unique identity of each organization.

Employers honored at the April 6 event were: Expeditors International of Washington, Inc., ICOM America, Inc., McKinstry Co., M Financial Group, Nelson Irrigation Corporation, Olympia Federal Savings, PACCAR Inc., Swanson Group, Inc., Usibelli Coal Mine, Inc., Valley Medical Center, Washington Permanente Medical Group, and Zimmer Gunsul Frasca Architects, LLP.

More information about the initiative is available at www.save10.org.

Utah-based Milliman clients recognized by “Save 10” initiative

Griffith-RobertMilliman was pleased to collaborate with the Financial Services Roundtable (FSR) to recognize Utah-based employers as part of our ongoing participation in the “Save 10” initiative. The initiative is a business-to-business, peer-to-peer effort encouraging responsible employers to help their employees better prepare for retirement.

The Salt Lake City event to recognize the employers was highlighted by a speech from Orrin Hatch, the senior U.S. senator from Utah. Senator Hatch discussed the importance of retirement savings and the need for strong organizations to provide their employees with the ability to have adequate savings for retirement. The event included a roundtable discussion where Tom Topik, Human Resources (HR) Strategic Business Partner of ARUP Laboratories and a client of Milliman, discussed the importance of retirement savings and the tools available for his employees to take charge of their retirement programs. Tom specifically highlighted the auto enrollment process and the use of Milliman’s InvestMap™ product to help employees properly invest using a custom asset allocation appropriate for their age and risk tolerance.

In addition to ARUP Laboratories, these other Milliman clients were recognized: America First Credit Union, OOCL (USA), and Twinlab Consolidated Corporation. All of these organizations were recognized for their dedication to retirement savings by including auto features in their retirement plans (either auto enrollment, auto escalation, or both) and enabling employees to save at least 10% of their incomes for retirement.

Save 10 Utah - Award Winners
Utah-based employers recognized by the Save 10 initiative.

The Save 10 initiative is a program that encourages retirement savings to remain in the forefront of employers’ and employees’ minds. The initiative also helps incentivize other companies to take a look at their retirement programs to see if they can make them better.

Read more about Save 10 and qualifying criteria at www.Save10.org. For more on Milliman’s retirement planning tools, click here.

Float income: Small stream, big waves

When discussing indirect compensation in relation to defined contribution plans, “float income” typically receives minimal coverage. However, litigation risk persists in a post-408(b)(2) world with regards to float. Diligent plan fiduciaries should be aware of this trickle of income and its implications.

“Float” or “Float income” represents interest that may be earned on cash held for investment or distribution. For most institutional trustees, the omnibus nature of these cash accounts makes it difficult to track and allocate the appropriate amounts at the participant level; thus the float is typically absorbed by the trustee or custodial firm.

While these earnings constitute eligible indirect compensation for Schedule C purposes, they could potentially be considered a prohibited transaction under ERISA if not properly disclosed. For that reason plan fiduciaries should make sure that float income is addressed within the service agreement between the plan and the applicable service provider and that it is properly disclosed on the form 5500 Schedule C. In order to avoid a prohibited transaction of fiduciary self-dealing, the service agreement must clearly state that the trustee may retain float income as additional compensation and provide a formula to estimate the dollar amount of compensation. Float income must be included in a discussion of the reasonableness of the service provider’s fees. It would be wise of plan fiduciaries to review the possibility of float income with their service providers, make sure it is reasonable, and, if possible, request certain fee offsets if the accumulation of float is significant enough.

With interest rates currently low, it would seem reasonable that most service providers are not earning a significant amount of float income; however, as interest rates increase, this could become a large source of income for a service provider. Plan fiduciaries may be able to manage float by:

  • Having clear policies in place for timing of contributions being invested (i.e., a limit of how many days after funding until contributions are invested)
  • Reviewing outstanding checks that have not been cashed in a timely fashion and the procedures in place to locate and have participants cash stale-dated checks.

When a plan fiduciary does their annual plan “checkup”—normally around 5500 time—it would be a good time to discuss float with the service provider and make sure all the necessary disclosures are being done, including Schedule C of the 5500 and service agreements.