Benefits: Retirement. BLR 2015 Survey Series MARCH. Sponsor 2 Participant summary 3 Executive summary 4 Survey questions/data 10

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1 BLR 2015 Survey Series MARCH Benefits: Retirement Each month BLR conducts a nationwide survey to learn about current HR policies and practices throughout the country. On average, more than 1,800 individuals participate in the surveys. The data from each survey is aggregated and then shared with participants and posted on BLR websites. Sponsor 2 Participant summary 3 Executive summary 4 Survey questions/data 10

2 Survey sponsor This online compensation resource gives you current, reliable information on thousands of job titles and hundreds of industries. You can be confident using this data to benchmark salaries in your organization. Pair the salary information with BLR s rate ranges, and you have a complete compensation system. This easy-to-use online service includes all of these features: Salary data on thousands of jobs for national, state, and metro areas saves you time and money. State and federal compensation laws explained. Plain-English answers to complex wage and hour regulations save time and expense. Your base subscription includes federal and one state. Additional states available for a modest charge. White papers and daily news. Puts best practice guidance and advice at your fingertips. Find out what other organizations are budgeting for merit increases as you develop your budget for the upcoming year. Carefully researched tools save you hours of time, including thousands of job descriptions, compensation forms, policies, and checklists. Breaking news, feature articles, and in-depth guidance to keep you ahead of the curve. Weekly e-zine. Take the Online Tour! See all that the site has to offer anytime it s convenient for you! Want a Personal VIP Tour? Just call or click Take a Product Tour and one of BLR s walkthrough specialists will give you a hands-on, no hassle overview. Take a look! Visit the website to find out more about a subscription to Compensation.BLR.com your online compensation resource!

3 About this survey Survey participants A total of 1,435 individuals participated in this survey, which was conducted in February Of those who identified themselves, 50% represent privately owned companies, 10.3% are with public entities, 17% work for government, and nonprofit organizations account for 18.7%. The majority (56.7%) of our survey respondents provide HR services to a workforce of employees. Another 13.2% provide guidance to employees at their organizations and 9.5% have a workforce of 501-1,000 employees. Companies with more than 1,000 employees account for 20.5% of survey participants. Over half (57.7%) of the participants are in service industries; 22.9% are in agriculture, forestry, construction, manufacturing, or mining; 7.6% are in wholesale, retail, transportation, or warehousing; 5.1% are in real estate or utilities; and 6.6% are in public administration. HR/benefit managers and directors account for 51.3% of the survey participants who self-identified, other HR/ benefit professionals make up 19.3%, 8.9% are VP level or higher, and 20.4% are in other areas with HR responsibilities. 3

4 What retirement benefits do you offer? Do you offer defined benefit and defined contribution plans? Offering either a 401(k) or 403(b) retirement savings plan to employees is a best practice for many U.S. employers. In fact, 81.4% of the employers responding to our 2015 survey offer one of these plans. Only 36.4% (compared to 39.9% in 2014 and 33% in 2013) of those who answered the question, however, automatically enroll employees, though 3% (compared to 2.3% in 2014 and 2.5% in 2013) plan to implement auto-enrollment in the future. Employee contributions When the employee enrollment in a defined contribution plan is automatic, the percent of employee earnings initially contributed is less than 3% for 23% (compared to 23.3% in 2014 and 27% in 2013) of the employers who responded to this question in our survey. It is 3% for 40.2% and 4% of employee earnings for 10%. The employee contribution is 5% of earnings for 9.5% and 6% of earnings for 8.6% as well. More than 6% of employee earnings are contributed for 8.6%. For 26.5% (compared to 22.2% in 2014) of survey participants, the level of voluntary participation in their 401(k) or 403(b) plans is less than 30% of employees. For 35.3% (compared to 37.6% in 2014), voluntary participation is 31% to 70% of employees and for 38.2% (compared to 40.2% in 2014) voluntary participation is above 70% of employees. 4

5 The percentage of their earnings that employees begin with when contributing to voluntary 401(k) or 403(b) plans is less than 3% of base salary for 24.8% (compared to 23.3% in 2014) of our survey participants. It s 3% of earnings for 29.4% (29.3% in 2014) and 4% of salary for 13.2% (14.5% in 2014). s to our survey show that employees begin their contributions at a rate of 5% of their base salary for 14.8% (15.9% in 2014) of employers, at 6% of salary for 13% (12.2% in 2014), and over 6% of earnings for 4.9% (4.8% in 2014) of employers. Though 87.3% don t allow it, the practice of employees adding the cash-out for their unused vacation or sick time to their 401(k) or 403(b) plans is permitted by 7% (6.3% in 2014) of employers and 5.6% (4.1% in 2014) are considering whether to allow it. The maximum amount an employee may contribute annually to their 401(k) or 403(b) plan for 91% (95.3% in 2014) of employers is the highest amount allowed by the IRS, which was $17,500 for 2014 and $18,000 for Employer contributions Though 19.9% have never provided an employer match, the majority (74.4%) of the employers responding to our survey that offer a 401(k) or 403(b) plan to their employees also provide a matching contribution. Though 3.3% tem- 5

6 porarily stopped their employer match in recent years and 2.4% stopped their match but plan to reinstate it, 11.4% maintained their matching contributions throughout the recent recession. The level of employers matching contributions is as high as 6% of employee earnings for 19.6% (23.9% in 2014) of employers, up to 5% for 13.2% (14.7% in 2014), up to 4% for 14.6% (14.9% in 2014), and up to 3% for 14.8% of employers. Up to 10% is the level for 2.3% (3% in 2014) of employers and 2.4% (3.4% in 2014) of survey participants match more than 10% of employee earnings. Matching employee contributions dollar-for-dollar is the practice for 33.6% (down from 41.4% in 2014). A match rate of 75 to the dollar is the norm for 1.6%, 50 on the dollar is provided by 23.6% (down from 31.3% in 2014), and 25 per dollar of employee contribution is standard for 9.9% (9.4% in 2014) of employers. No match is provided by 31.3%. The employee service requirement for vesting of employer contributions is 5 years for 25.6% (23.8% in 2014) of employers and 15.9% (12.5% in 2014) require more than 5 years. Less than a year of service is required by 21.7% (up from 25.6% in 2014) of employers, 1 year is required by 18.9% (16.5% last year), 2 years is the rule for 5.1% (4.9% in 2014), 3 years is required by 9.7% (down from 13.3% in 2014), and 4 years is the vesting level for 3.1% (3.4% last year). Plan features 33.6% match employee contributions dollar for dollar. Less is more and more is less when it comes to the number of investment options offered in 401(k) or 403(b) plans in 2015 when compared to 6

7 the number offered in For example, more than 15 investment options are available to 43.1% of employers (down from 50.7% in 2014) and options are offered by 27.7% (same as last year). Another 16.3% (13.4% in 2014) offer 6-10 investment options, and 12.9% (8.2% in 2014) of employers in our 2015 survey offer 1-5 options. Target Date/Life Cycle funds are available for 65.3% of survey participants. The in-plan Roth conversion, a feature made available by the Small Business Jobs Act of 2010, is available for 29.8% and 3.5% are planning to add the feature. Other retirement benefits offered Benefit type Defined benefit plan 27% 23.70% Roth 401(k) 31.10% 33.20% 457 plan 13.90% 13% Profit sharing 17% 22.70% Stock options Employee stock ownership plan Union-sponsored pension plan SIMPLE or SEP 3.40% 5.60% 3.30% 4.10% 3.90% 7.20% 2.60% 4.30% Retirement benefits in 2015 are about the same as 2014 for 87.1% of survey participants and more generous for 4.5%. It s been 5 years or more since 24.9% of our survey participants conducted a comprehensive review of their retirement benefits package. A thorough review was conducted in 2014, however, by 41.7% and in 2013 by 14.1%. Benefits planning and administration When it comes to deciding which retirement benefits to offer, 34.5% work with a consultant to create plans and 29.3% evaluate benefits offered by other companies and their competitors. A survey to find out what employees have an interest in is conducted by 9% and 41.8% are guided by the cost. 7

8 Retirement benefits are managed in-house by 18.9% of those who responded to this question in our survey. Some of the administration of benefits is outsourced by 43.1% and all administration is outsourced by 38%. 46.5% offer employees financial planning assistance. Our survey shows that 9.7% plan to add or make changes to their 2016 retirement benefits package, 61.6% of employers have no additions or changes planned, and 28.8% are not certain at this point in time. For those who are planning to add or make changes to their retirement benefits, 13.1% are planning to add a defined contribution plan such as a 401(k), 403(b), or Roth 401(k) and 17.9% are planning to increase their employer match to their existing defined contribution plan, while 6.2% are planning to reduce the level of their employer match. Additions/changes planned for 2016 Add a defined benefit plan: traditional pension plan 6.9% Increase employer contribution to defined benefit plan 9.9% Reduce employer contribution to defined benefit plan 6.6% Eliminate current defined benefit plan 5.5% Add a defined contribution plan: 401(k), 403(b), Roth 401(k) 13.1% Increase employer match to current defined contribution plan 17.9% Reduce employer match to current defined contribution plan 6.2% Reduce employee length of service required for employer match to vest in defined contribution plan 4.4% Increase employee length of service required for employer match to vest in defined contribution plan 3.6% Eliminate current defined contribution plan 2.6% Clean up language within plan documents 36.1% Change how plan documents are distributed 19.0% An increase in the length of service required for vesting of employer contributions is planned for 3.6% and 4.4% plan to reduce their length of service requirement. Cleaning up the language in their plan documents is a priority for 36.1% and a change in how documents are distributed is planned for 19%. Current defined contribution plans will be eliminated for 2.6% (down from 3% last year) of participants who answered this question in our survey. 8

9 The addition of a defined benefit plan is planned for 6.9% and 9.9% expect to increase the employer contribution to their existing plan. For 6.6%, however, a reduction in their employer contribution is planned. 17.3% offer early retirement to their employees. The Other selection for the question about changes to 2016 retirement benefits accounted for 81.8% of the responses and includes: Add auto enroll employees, 2.68% Change plan options, 5.80% Add retiree insurance benefits, 1.79% Change provider/administrator, 4.02% Change employer contribution/match, 4.46% Change service/eligibility requirement, 3.57% Unsure, 23.66% No changes, 48.21% Other, 7.59% It s almost an even split when it comes to whether employers offer financial planning assistance to their employees with 46.5% offering such assistance and 48.3% not providing this service to employees. The remaining 5.2% aren t sure whether this benefit is offered. Early retirement is an option for the employees of 17.3% of our survey participants. It is not offered by 77.3%, though, and 5.5% aren t sure. Of the employers that do offer early retirement, 13.1% ask the retiring employees to sign a waiver/release of claims against the company. Surprisingly, 57% (55% in 2013) do not make signing a waiver/release a requirement and 29.9% are not sure if it s a requirement. 9

10 Survey Data Where is your company located? Central/Rocky Mountain/Southwest: AZ, CO, ID, KS, MT, ND, NE, NM, NV,SD, UT, WY 10.6% 150 East Central: IA, IL, IN, MI, MN, MO, OH, WI, WV 23.2% 329 Far West: AK, CA, HI, OR, WA 11.8% 167 Northeast/Mid-Atlantic: CT, DC, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VA, VT 22.7% 322 South: AL, AR, FL, GA, KY, LA, MS, NC, OK, SC, TN, TX 25.3% 360 International 6.5% Number of employees % % % % , % 136 1,001-2, % 103 2,501-5, % 66 5,001-10, % 45 Over 10, %

11 Business type Privately owned 46.6% 662 Employee owned 1.3% 18 Public corporation 10.3% 147 City, state, or federal government 13.2% 187 Private school or college/university 2.1% 30 Public school or college/university 3.8% 54 Not-for-profit 18.7% 266 Other 4.1% Industry category Accommodation, Food Services 1.1% 16 Administrative and Support Services 2.3% 32 Agriculture, Forestry, Fishing, and Hunting 1.3% 19 Arts, Entertainment, and Recreation 1.3% 18 Construction 3.3% 47 Educational Services 9.1% 129 Finance and Insurance 9.4% 133 Health Care and Social Assistance 15.2% 216 Information (Media, Data, Telecommunication) 1.9% 27 Management of Companies and Enterprises 0.5% 7 Manufacturing 16.9% 240 Mining, Quarrying, and Oil and Gas Extraction 1.4% 20 Other Services (except Public Administration) 9.4% 134 Professional, Scientific, Technical Services 7.5% 107 Public Administration 6.6% 93 Real Estate and Rental and Leasing 1.6% 23 Retail Trade 2.4% 34 Transportation and Warehousing 3.0% 43 Utilities 3.2% 45 Waste Management/Remediation Services 0.3% 4 Wholesale Trade 2.2%

12 Does your company offer a 401(k) or 403(b) retirement plan to employees? Yes 81.4% 1148 No 15.6% 220 Not sure 3.0% Do you automatically enroll employees in your organization s 401(k) or 403(b) plan? Yes 36.4% 388 No 60.6% 646 No, but we are planning to start automatic enrollment 3.0% 32 Other 4.3% If employee enrollment in your 401(k) or 403(b) plan is automatic, what is the percentage of employee earnings automatically contributed? Less than 3% of salary 23.0% 99 3% of salary 40.2% 173 4% of salary 10.0% 43 5% of salary 9.5% 41 6% of salary 8.6% 37 More than 6% of salary 8.6% 37 Other 21.2%

13 When enrollment in your 401(k) or 403(b) plan is voluntary, what percentage of earnings do most employees begin their contributions with? Less than 3% of salary 24.8% 230 3% of salary 29.4% 272 4% of salary 13.2% 122 5% of salary 14.8% 137 6% of salary 13.0% 120 More than 6% of salary 4.9% 45 Other 6.8% What is the maximum amount an employee may contribute annually to their 401(k) or 403(b) plan? Less than $1, % 15 $1,001 to $2, % 15 $2,501 to $5, % 21 $5,001 to $10, % 19 $10,001 to $15, % 23 The maximum allowed by the IRS ($17,500 for 2014) 91.0% 936 Other 4.0%

14 When enrollment is voluntary what percentage of employees participate in your 401(k) or 403(b) plan? Less than 10% 10.0% 95 11% to 20% 6.6% 62 21% to 30% 9.9% 94 31% to 40% 8.8% 83 41% to 50% 8.0% 76 51% to 60% 8.7% 82 61% to 70% 9.8% 93 71% to 80% 11.2% % to 90% 12.2% % to 100% 14.8% 140 Other 4.4% Are employees allowed to add cash outs of unused vacation or sick time to their 401(k) or 403(b) accounts? Currently allowed 7.0% 74 Not currently allowed, but considering it 5.6% 59 Not allowed 87.3% 918 Other 3.7%

15 What is the status of your employer match for your 401(k) or 403(b) plan? Never matched 19.9% 198 Stopped match then reinstated 3.3% 33 Stopped match but plan to reinstate 2.4% 24 Have match and haven't stopped 11.4% 113 Have match but plan to stop 0.3% 3 Have match and no plan to stop 62.7% 623 Other 8.9% Up to what percent of an employee's earnings does your company make a matching contribution to their 401(k) or 403(b) plans? No match 21.5% 212 1% 2.2% 22 2% 3.8% 38 3% 14.8% 146 4% 14.6% 144 5% 13.2% 130 6% 19.6% 194 7% 2.1% 21 8% 2.9% 29 9% 0.5% 5 10% 2.3% 23 More than 10% 2.4%

16 At what rate does your company match employee 401(k) or 403(b) plan dollar contributions? (For example: will match up to 25% of employee contribution at 50 on-the-dollar.) No match 31.3% on-the-dollar 9.9% on-the-dollar 23.6% on-the-dollar 1.6% 13 dollar-for-dollar 33.6% 272 Other 24.2% What is the service requirement employees are required to achieve before becoming 100% vested in their 401(k) or 403(b) plan's employer contributions? Less than 1 year 21.7% year 18.9% years 5.1% 45 3 years 9.7% 86 4 years 3.1% 28 5 years 25.6% 228 More than 5 years 15.9% 141 Other 13.4%

17 What is the number of investment options your 401(k) or 403(b) plan offers? 1 to 5 options 12.9% to 10 options 16.3% to 15 options 27.7% 272 More than 15 options 43.1% Do your 401(k) or 403(b) investment options include Target Date/Life Cycle funds? (A fund where the overall asset allocation automatically adjusts to become more conservative as the employee's expected retirement date approaches.) Yes 65.3% 646 No 17.5% 173 Not sure 17.2% Have you added the in-plan Roth conversion feature that was made available by the Small Business Jobs Act of 2010? Yes 29.8% 289 No 47.5% 461 No, but we are planning to add it 3.5% 34 I've never heard about the feature 19.2% 186 Other 1.6%

18 Please select any other retirement benefits from the list below that are offered to employees by your company. Defined benefit plan: traditional company pension 27.0% 279 Roth 401(k) 31.1% plan 13.9% 144 Profit sharing 17.0% 176 Employer stock options 3.4% 35 Employee stock ownership plan 5.6% 58 Union-sponsored pension plan 3.3% 34 SIMPLE or SEP 4.1% 42 No retirement benefits are offered 26.0% 269 Other 9.2% How do your retirement benefits for 2015 compare with last year's? Less generous in % 47 About the same 87.1% 1047 More generous in % 54 Not sure 4.5% When was the last time your organization did a comprehensive evaluation of its retirement benefits package? In % 458 In % 155 In % 111 In % 44 In % 57 Before %

19 How does your organization determine what retirement benefits it will offer to employees? Cost to company 41.8% 441 Survey employees to see what they are interested in 9.0% 95 Work with a consultant to create a plan 34.5% 364 Evaluate benefits packages offered by other companies and our competitors 29.3% 309 Not sure 20.4% 215 Other 8.7% Do you outsource the administration of any of your retirement benefits? Yes, we outsource all of it 38.0% 426 Yes, we outsource some of it 43.1% 484 No, we do it all in-house 18.9% Is your organization considering adding retirement benefits or making changes to its retirement benefits package for 2016? Yes 9.7% 113 No 61.6% 719 Not sure 28.8%

20 What kind of additions or changes are you planning to make to your retirement benefits offerings for 2016? Add a defined benefit plan: traditional pension plan 6.9% 19 Increase employer contribution to defined benefit plan 9.9% 27 Reduce employer contribution to defined benefit plan 6.6% 18 Eliminate current defined benefit plan 5.5% 15 Add a defined contribution plan: 401(k), 403(b), Roth 401(k) 13.1% 36 Increase employer match to current defined contribution plan 17.9% 49 Reduce employer match to current defined contribution plan 6.2% 17 Reduce employee length of service required for employer match to vest in defined contribution plan Increase employee length of service required for employer match to vest in defined contribution plan 4.4% % 10 Eliminate current defined contribution plan 2.6% 7 Clean up language within plan documents 36.1% 99 Change how plan documents are distributed 19.0% 52 Other 81.8% Do you offer financial planning assistance as a benefit to your employees? Yes 46.5% 457 No 48.3% 474 Not sure 5.2% 51 Other 4.0%

21 Does your organization offer an early retirement option to employees? Yes 17.3% 193 No 77.3% 864 Not sure 5.5% 61 Other 3.2% If your organization offers early retirement, are retiring employees asked to sign a waiver/release of claims they have or might have against the company? Yes 13.1% 67 No 57.0% 292 Not sure 29.9% 153 Other 14.3% Job title or position Benefits Coordinator/Assistant 2.8% 27 Benefits Manager 5.3% 51 Benefits Director 1.1% 11 Benefits VP or Higher 1.6% 15 HR Coordinator/Assistant 3.8% 36 HR Generalist 7.9% 76 HR Specialist 4.8% 46 HR Manager 21.9% 210 HR Director 23.0% 220 HR VP or higher 7.3% 70 Other area with HR responsibilities added 20.4%