Up Close with a 403(b) Sponsor in the Care Industry

John Iekel

Retirement coverage is not universal, and any employer can find it challenging not only to cover employees, but also to motivate them to participate in the retirement plan that it offers. But it can be particularly challenging for some industry sectors. 

Joey Leonhardt, Vice President of Human Resources at Care Initiatives—a post-acute care provider that offers a 403(b) plan—at the November 2023 SPARK Forum shared his experiences and the challenges his firm faces in providing retirement plan coverage. 

The Workforce and Company 

Demographics. Like other businesses in this sector, Leonhardt said his company has a young workforce. 

Building a Workforce. Leonhardt said that the problem was not recruiting new employees as much as it is keeping them. He said that it is “very hard” for them to build their workforce, and that they have a 100% turnover rate.

Communicating with Employees. Leonhardt says that they do not use email to communicate with employees about human resources issues and benefits—rather, they use an app to make it possible for employees to access information through its benefits portal. 

Employee Match. Leonhardt said that Care Initiatives dropped their employee match. 

Attitudes Toward Retirement Preparation

Care Initiatives employees are not looking at their retirement, said Leonhardt—they are looking for the best take-home pay. “They don’t understand” about the importance of retirement saving, he said, noting, “they’re living day to day.” 

That attitude is not necessarily ameliorated by higher salaries, Leonhardt added. He observed that those at Care Initiatives who started as low-income employees and came up through the ranks may continue to hold the short-term attitudes toward income and retirement saving they held when they earned less and were less able to save. 

Just 13% of Care Initiatives’ employees participate in their 403(b) plan. 

Strategies 

Leonhardt said that the biggest reason employees leave is to find jobs with higher salaries. But recognizing the effect of wage levels on retention rates does not mean that it’s easy to address that matter. “I would love to pay them more, but the money isn’t there,” said Leonhardt. 

Care Initiatives is hoping to restore their employer match of employee contributions. Leonhardt noted that not having one hurts their recruitment efforts—especially regarding higher-level employees. 

Making presentations to employees about retirement saving during annual enrollment can be a mistake, Leonhardt indicated. “It gets lost in the fog,” he said of what happened when Care Initiatives has made such presentations while employees are making choices about other aspects of their benefits coverage. They’re just focused on other things, Leonhardt said. 

Instead, Leonhardt added, Care Initiatives has found that it is most effective to make presentations to employees about retirement saving and its plan at times other than annual enrollment.

The Bigger Picture

“I just don’t think they understand the enormity” of saving for the future, remarked Leonhardt. 

So what do employers in the care industry need from retirement professionals?

Education. Leonhardt argued that education is key—not just for employees, but in the school systems in general. “They’re not teaching that” in schools, he said regarding the importance of retirement saving—even in business schools. He argued that financial literacy should be part of curricula—including at the high school level. 

Take initiative. Leonhardt said that they need help in reaching team members who don’t understand retirement plans and the importance of retirement saving. And he would like retirement plan professionals to take the initiative. “I don’t like to chase our vendors,” he said, adding, “They should be coming to me.” 

“We need you to come alongside us,” said Leonhardt.