Defined Contribution Plans At a Medium-size Company

Education is essential, given the different retirement options available to employees today,says Craig Copeland, senior research associate with Employment Benefit ResearchInstitute. Unfortunately, not all employers are providing it. As a result, people leave companies with large sums of money in their retirement plans and little idea what to do with them.

    That’s not the case at Monarch Marking Systems. Vice president of HR Rhonda Mangieri does her best to make sure of that at the Miamisburg, Ohio-based subsidiary of Paxar Corp. Monarch is a leading provider of bar-code printers and related software, services, supplies, and labels.

    The company also is on the cutting edge when it comes to technology-assisted HR. Retirement and pension options are no exception.

    Administration of Monarch’s more than $50 million defined contribution or 401(k) plan is paperless and has been since January 2000. Enrollment is primarily online through the outsourced 401(k) provider, CIGNA Corp.’s Retirement & Investment Services. (Plan enrollment and changes also can be done via telephone.)

    But Mangieri’s staff plays an active role nonetheless. Communication with employees and administrators doesn’t go away just because plan administration is outsourced. It’s especially important if employees are used to a more traditional paternalistic relationship, with direction and hand-holding from a company’s internal HR staff, says Mangieri. That staff still has a responsibility to keep on top of developments, and to remind employees of provider access numbers, plan availability, and general plan provisions.

    “It’s so important that when you outsource, people understand that you are not disconnecting them from the company but offering them more…. You always have to sell the value of your benefits and to sell the value of your benefits when they have been outsourced.”

    Mangieri’s staff has brochures for employees that list phone numbers, Web sites, and other contact information for all the company’s benefits vendors. The staff frequently updates employees about new plan or investment information from CIGNA, and periodically meets with employees to keep them informed. Plan updates and information also are posted the old-fashioned way on bulletin boards. Any HR staff member can answer general retirement-benefits questions, too, courtesy of a “cheat sheet,” even though one person specifically handles the benefits and works with third-party providers.

    Mangieri estimates that the company has reaped a 20 percent cost savings with itscurrent system. Her staff has downsized from 22 in 1996 to 13 before the full online launch in 2000 to just 5 today. Benefits administration alone went from four employees to just one person. Aside from administrative cost savings, the outsourced provider also does a better job in terms of communication with employees through material and online access, she adds.

    Employee reaction to the system has been good. They like the online visual access to their accounts better than the automated telephone responses that were used prior to January 2000, says Mangieri. There also doesn’t seem to be any reluctance on the part ofemployees or retirees to use PCs. Two years ago, Monarch, in a random sampling of about 500 manufacturing employees, found that 52 percent had PCs at home. That’s in addition to most employees already using PCs on the manufacturing floor.

    Another key element to the success of any company’s 401(k), says Mangieri, is communication between vendor and employer. “Make sure your provider understands your vision, your philosophy relative to providing services to your employees, and that one of those paramount things has to be education. They have to have a willingness to educate, to keep your group informed of what’s going on, and to do on-site educating of employees.”