Case Study
Participant Services

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Situation: Employee engagement and retirement readiness are trending topics in the retirement plan marketplace. Cornerstone understands employers’ need for support in these areas. Our team of participant services professionals meets with participants to explain options within the plan and to promote disciplined retirement savings strategies. In some cases, when an employer makes significant plan changes, our team helps explain concepts that are foreign to most people.

One recent situation involved an industrial organization that was terminating their defined benefit plan in favor of a defined contribution plan. This change allowed employees to make one of several choices: cash out, roll into a 401(k) plan, or accept payment in the form of an annuity. The employer had several locations, had both union and non-union employees, and was undertaking this project during a period of market volatility.

Solution: Because each employee’s decision needed to be based on individual factors, Cornerstone’s participant services team set up several town hall meetings to explain the purpose of the change and the choices available. Knowing that these group meetings would be insufficient for most to make educated decisions, Cornerstone also met one-on-one with employees to discuss their situations and help them understand the information provided by the company.

Because Cornerstone also manages the company’s 401(k) plan, we were able to create a single point of contact for employees to learn about their options. Although the participant services team could not provide individualized advice to the participants, our onsite consultants were able to provide plain language interpretations for employees.

Results: We have often seen that when employees have the option to “cash out” their retirement plans instead of rolling them into other retirement vehicles, more participants will choose to take the cash than is likely in their long-term best interest. However, in this case, most employees chose to roll the money from their defined benefit plan into the 401(k) plan or elected to take an annuity payment upon retirement.

The importance of these decisions is magnified when considered relative to the state of retirement readiness in America. Many workers struggle to maintain a disciplined retirement savings strategy and to resist the urge to tap into their retirement savings too early. By extending their rapport with participants in the 401(k) plan, Cornerstone’s participant services team was able to help them make strong decisions for the defined benefit plan termination.