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Taking a hard look at its 403(b) plan in 2021 led Kansas City-based MRIGlobal to make some significant plan design changes. The nonprofit scientific research institute boosted the employer match to 100% of up to 8%, doubled the default deferral rate to 6% from 3%, and hiked the auto-escalation cap to 8%.

Each year, MRIGlobal’s employee benefits committee does an in-depth review focused on one part of the organization’s benefits package. Last year, its review focused on the 403(b) plan.

“The deep dive is an opportunity to do a recurring review of the current best practices and see what’s out there, and to be able to see, are we still accomplishing our goals for that benefit?” says Human Resources Manager Monica De Agostino. Last year, the committee worked with its plan adviser, CBIZ, to look at current 403(b) plan best practices, plan data on key metrics, and competitors’ offerings. With CBIZ, the committee benchmarked its 403(b) plan’s design based on comparisons with national statistics, industry statistics and local employer best practices.

The 403(b) plan previously had a 50% match of up to 6% of pay, plus a 1.5% to 6% nonelective contribution that varied based on an employee’s years of service and age. “There was some confusion among our employees,” Senior Benefits Administrator Julia McCullough recalls. “They understand the concept of a match, but when I explained the additional employer contribution, I could just see their eyes glazing over. They didn’t understand it.”

The benefits committee talked about making the employer contribution clearer, among other plan design changes. “We started discussing, how can we make this simple for our employees?” De Agostino says. “Through that study, it was evident that we needed to make some changes.”

The changes to the default deferral and auto-escalation rates, as well as the employer contribution, took effect Jan. 1. MRIGlobal gets a monthly breakdown of key plan data from its recordkeeper, Empower, and it shows that the changes have already had an impact. As of Feb. 28, the participation rate increased from 92% to 97% in the first two months of the year. The average contribution inched up from 9.3% to 9.7% in those two months. And 65% of participants now contribute 8% or more, enough to maximize the match. Another 20% of participants contribute at least 6%, but less than 8%.

The 2021 review identified 16% as the target combined contribution percentage for employees to have adequate retirement savings. “We said, ‘We want to do this in true partnership with employees,’” De Agostino says. “So if we contribute 8% and they contribute 8% a year, they will get 16% a year contributed to their account.”