Hunter Bethea
The people most at risk of not having enough money to retire on may not always know the danger they are in.
That's why the Tennessee Department of the Treasury initiated a campaign aimed at helping high-need participants in the state's 401(k) plan through one-on-one meetings with financial advisers, said Hunter Bethea, director of deferred compensation programs for the Treasury Department in Nashville, Tenn., and winner — along with his team — of an Excellence & Innovation Award.
State Treasurer David H. Lillard Jr. had long promoted the one-on-one participant meetings offered through the state's RetireReadyTN retirement program and "wanted to drive more at-risk participants to take advantage of the service," Mr. Bethea said.
"The purpose of RetireReadyTN programs is to make sure that public employees in the state of Tennessee are on track for a successful retirement, and we want to make sure that these services are benefiting every participant we have to the maximum extent possible," Mr. Bethea said.
RetireReadyTN officials worked closely with the plan's record keeper, Empower Retirement, to leverage data from the Tennessee Consolidated Retirement System's defined benefit plan to identify high-need 401(k) participants and improve retirement readiness metrics overall, Mr. Bethea said.
One of the four high-need groups the program identified consisted of participants who were not contributing to their 401(k) accounts. Participants were automatically enrolled in the mandatory 401(k) plan at 2% of their salary, but some participants dropped the deferral to zero. The $4.63 billion plan, which was made available to new hires in July 2014, gave participants a non-elective employer contribution of 5%.
Individuals with retirement income replacement ratios below 70% were also identified as being at risk, as were individuals over the age of 50 whose 401(k) accounts were more than 75% invested in equities. The fourth high-need group consisted of individuals with a high level of inflation risk: those under age 50 with less than 25% invested in equities and those over age 50 with less than 10% in equities.
Roughly 60% of the 200,000 Tennesseans in the 401(k) plan and the $650 million 457 deferred compensation plan were at risk in some way, with most having high inflation or equity risk, Mr. Bethea said.
In addition to sending targeted messages to each of the high-need groups, RetireReadyTN heavily encouraged participants to take advantage of one-on-one meetings with Empower's plan advisers. The Tennessee Treasury Department's outreach team, for example, introduced advisers at government employee conferences and promoted plan adviser meetings at regular employer and employee information sessions conducted throughout the year.
The introductions were important in helping state employers overcome their wariness in working with outside vendors.
"We teach both employers and employees to be cognizant of businesses reaching out that may not be working in their best interest," said Ashley Nabors, assistant treasurer for the financial empowerment division of Tennessee's Treasury Department in Nashville, Tenn.
State employers were assured that the advisers did not work on commissions and did not receive compensation based on the actions taken during the one-on-one meetings.
"Even though they are not employees of the state of Tennessee, they are the only contractor that we authorize to present information on our behalf and conduct these types of meetings," Mr. Nabors said of Empower's plan advisers.
Judges commended the program's focus on high-need participants with one judge praising its clever tagline, "Your investments may be out of balance with your life."
