Castle Rock Investment Company Client Named a Finalist for 2012 PLANSPONSOR of the Year
Castle Rock Investment Company is pleased to announce that its client – Platte Valley Financial Service Companies, Inc. a Scottsbluff, Nebraska-based banking and insurance company – has been named a finalist for 2012 PLANSPONSOR of the Year.
Each year, the editors of PLANSPONSOR magazine—the industry’s leading resource for retirement-benefits related news—recognize employers that demonstrate leadership in providing a more secure retirement for their employees.
Here is in an excerpt from the article:
Rather than offering an employer match, the 401(k)/employee stock ownership plan (ESOP) of Platte Valley Financial Service Companies Inc. had been including an annual discretionary company contribution that, most years, equaled about 6% of an employee’s pay. Most employees got a 6% contribution without contributing anything themselves, says Jim Kozal, executive vice president, chief operating officer (COO) and chief financial officer (CFO) at the Scottsbluff, Nebraska-based banking and insurance company. “So, we had numerous people who were doing just that—nothing.”
Prior to its move away from the discretionary contribution to a match—effective last January—the $5 million plan had an 84% participation rate, and deferrals from non-highly-compensated employees averaged 4.7%. Platte Valley made the change because “the company wants to help, but we are asking people to help themselves, too,” Kozal says of the 266 participants.
The decision to change strategies began when the plan’s adviser, Michele Suriano of Castle Rock Investment Co., suggested that Platte Valley engage Fiduciary Benchmarks Inc. to look at the plan’s participation and participants’ retirement readiness. That research “determined that our employees seemed to be falling short on retirement readiness,” Kozal says. The company decided one of the ways it could help “is to do a match to encourage everybody to participate,” he says.
Employees now get a 3% contribution to their retirement accounts, even if they fail to contribute, themselves. To get more, they must contribute. The company matches 50% of the first 5% of pay that an employee contributes, then adds what Kozal calls a “super-match”: If an employee increases his contribution to more than 5%, the company will match each additional percentage point 150%. So, an employee making a 6% contribution gets a 4%—2.5% plus 1.5%—match from the company, plus the initial 3% contribution, for a total annual employer-employee contribution of 13%. Platte Valley’s retirement plan has an ESOP component, and the company’s match of employee contributions comes in the form of a cash contribution to the ESOP; then the money gets used to buy company stock that becomes part of an employee’s retirement holdings. As a result, employees own 8.7% of the company.
By year-end 2012—one year after implementing the new match approach—participation totaled 94%, and the average deferral had increased to 5.9%; a 1% automatic enrollment auto-increase also helped.
Asked why Platte Valley did the super-match, Kozal says, “It demonstrates the willingness of the company to try to do what is right for our associates.” About 6% of employees still do not contribute, despite appeals from human resources and offers to arrange one-on-one meetings with plan adviser Suriano for them.
Platte Valley has made a tool available that allows employees to test their retirement readiness, and, if they feel uncomfortable doing that themselves, Suriano can assist them. The results often reveal a shortfall, which surprises many employees and helps convince them to start contributing, Kozal says.
—Judy Ward
Castle Rock Investment Company, formed in 2006, is an independent woman-owned SEC-registered investment adviser located in Castle Rock, Colorado. We specialize in individual financial plans and qualified service plans.