Bankers Who Care

Pension Termination

This Philadelphia-based credit union, once part of a corporate behemoth, looked to expand and streamline its operations and human capital offering. At issue was the existence of two retirement plans, a long-standing (and costly) Defined Benefit Pension and a Safe Harbor 403b. Among the first activities on the docket for the management team were:

  • Study and report on the long-term viability and expense requirements of the organization’s pension
  • Understand the pension termination/freeze processes and cost
  • Develop a plan that showed the rank and file that management cared, not only about their today, but also about their tomorrow
  • Take into consideration some of the pension’s best features (tenure rewards/higher-than-average income replacement metrics)
  • Create a strategy to have just one retirement plan that every employee would participate in
  • Deliver that plan and messaging to every single employee in both group and individual settings, with multiple touch points along the way

The result:

  • Termination of the existing pension
  • Creation of a non-elective match that would grandfather existing pension employees and reward them over a 10-year period with contributions that met or exceeded what they would have received in the pension, while controlling overall plan costs
  • Development and delivery of customized employee analyses highlighting the positive effects of the enhanced 403b plan and the effect their pension rollover would have on their own retirement outcomes
  • Employees increased 403b deferrals by an average of 4%
  • 403b plan participation rose from 74% to 96%
Case studies may not be representative of all clients results and are not indicative of future performance or success. 
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