Christopher Moss
After shuttering its defined benefit plan in 2021, global packaging company Sonoco Products Co. knew it needed to turn its attention to its $1.2 billion 401(k) plan.
"It was time to focus on the 401(k) plan and freshen it up as far as the benefits were concerned to make it appeal more to the contemporary workforce," said Christopher Moss, Sonoco's Hartsville, S.C.-based senior manager of employee benefits and winner of an Excellence & Innovation Award.
The company eliminated its 4% non-elective contribution and used the savings to boost its 401(k) match. Under the new matching formula, employees now receive a dollar-for-dollar match up to 6%, an improvement over the 50 cents they were receiving on the dollar, up to 4%.
"We would always get gripes about our lousy match," Mr. Moss said, referring to the previous 2% maximum company matching contribution.
Sonoco also eliminated caps on the employee contributions of high-income earners making more than $135,000. Previously, highly compensated employees could contribute only 6% of their pay to their 401(k) accounts.
"Highly compensated employees never had the opportunity to maximize their savings under the plan," Mr. Moss said.
The company also raised the auto-enrollment savings rate to 6% from 4% and added an auto-escalation feature that automatically raised deferral rates 1 percentage point per year, up to 10%.
For many years, the company auto-enrolled participants at 3%, which Mr. Moss said was probably too conservative. "People were stuck at the 3% level, so now we're getting more people in the 4, 5 and 6-plus category," he said.
As a result of the auto escalation and other features implemented, 56% of Sonoco's 13,000 participants now contribute at least 6%, up from 39% who were doing so prior to the plan redesign.
As of Aug. 31, deferral rates averaged 7.2%, up from 6% before changes were implemented.
Participation rates, which were already fairly high prior to the changes, jumped even higher to 97% from just over 90%.
"We went from 900 people not participating at all to 100 people not participating," Mr. Moss said.
As to direct employee feedback, Mr. Moss said: "I've not had anybody complaining."
Judges praised the company's effort to help employees secure their retirement absent a pension plan. "While you hate to see another employer shifting from a defined benefit and defined contribution model to a defined contribution model only, the effort made by Sonoco to help ensure that employees not only participate in the defined contribution plan but also save enough to stay on track toward long-term financial goals is commendable," one of the judges said.
"A lot of very positive changes," said another.
