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Understanding the Retirement Planning Needs of Boomer Women

and Hourly Wage EarnersStacy Donck, CEBS

Strategic Relationship Manager Voya Financial

Braintree, Massachusetts

David Simpson, CEBSDirector, Benefits, Savings & Compliance

SodexoAllentown, Pennsylvania

14B-1

Overview

• Hourly Wage Earners • Women in the Workforce• Baby Boomers • Support for Retirement Planning—Case Studies• Sodexo and Meeting the Needs of Their

Employees

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Overview of Hourly Wage Earners

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The $35 an Hour or $70,000 a Year Experiment

Why the difference? Those given the hourly wage felt less permanency and confidence in long-term work prospects, and thought more short-term with a focus on immediate financial needs.

• Saved more• Had a long-term investment horizon

• Saved less• Had a shorter-term investment horizon

Source: MetLife Foundation

Group 2$35 an Hour

Group 1$70,000 a Year

Hourly Wage Earners: Potential Impact on their Retirement

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58.3%of the workforce

In 2017, 80.4 million U.S. workerswere paid hourly

Bureau of Labor Statistics March 2018 - Characteristics of minimum wage workers, 2017

Hourly Wage Earners: Who are They?

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Age Distribution of All Hourly Wage Earners—2018

18%

35 - 44

18%

45 - 54

15%

55 - 64

5%

65 +

24%

25 - 34

20%

15 - 24

Bureau of Labor Statistics March 2018

Hourly Wage Earners:They Span the Age Groups

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Hourly Wage Earners:Majority Work Full-Time

Bureau of Labor Statistics March 2018

75% are full-timeworkers working35 or more hours a week

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2,400,490

2,445,230

2,889,970

3,131,390

3,398,330

4,562,150

Laborers, Freight, Stock

Waiters & Waitresses

Office Clerks, General

Food Prep

Cashiers

Retail Sales

Source: NELP calculations from May 2014 OES: 2012 BLS employment projections. OES wage measures include tips and commission but not overtime.2 Bureau of Labor Statistics March 2018 Characteristics of minimum wage workers, 2017

Largest occupations and number workers with median wages less than $15 per hour1

42%

earn $15/houror less1

Only 2% earn at or below the Federal minimum wage of $7.25/hour2

Hourly Wage Earners:A Good Portion Cap Wages at $15/Hour

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Hourly Wage Earners:While the Rest Earn More

Degree-required professional jobs come with much higher wages

• Police Officer $29• Registered Nurse $34• Speech Therapist $38• Engineer $38• Occupational Therapist $40• Air Traffic Controller $60• Nurse Anesthetist $79

Source: NELP calculations from May 2014 OES: 2012 BLS employment projections. OES wage measures include tips and commission but not overtime.

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62% of female workforce is paid hourly

56% of male workforce is paid hourly

Hourly Wage Earners: Women or Men?

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Overview of Women in the Workforce

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4 in 10 women will take a career break to look after children or aging parents.1

The average working woman in the US who takes a five-year career break at age 26 to care for a child will

lose $476,000 in income and future retirement savings.1

1 Center for American Progress

Women in the Workforce: Potential Impact on their Retirement

2 United States Department of Labor, Women’s Bureau Labor Force Participation Rates, 2016

70% of women with children under 18 are

working; 75% of whom are full-time2

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3.66 3.493.17

2.61

Paid TimeOff

FlexibleSchedule

Work fromHome

PaidParental

Leave

When women with children were asked to rate from 1 to 4, the importance of each of these benefits, they said . . .

Watermark, What Women Want— And Why You Want Women—In the Workplace ©2017 Center for Creative Leadership. All rights reserved.

Did you know . . .

Gallup, 2017 Women in America: Work and Life Well-Lived

of working females are watching for or actively looking fora new opportunity

Women in the Workforce: Money is Not Everything

48%

and did you know . . . women make up 41% of the GIG economy

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National Center for Educational Statistics Bachelor's, master's, and doctor's degrees conferred by postsecondary institutions, by sex of student and discipline division: 2014-15

Today, a higher percentage of women are graduating with post secondary degrees then men

Bachelor

57%Bachelor

43%

Post Graduate

60%

Post Graduate

40%Doctorate

52%Doctorate

48%

Women Men

Percent of Total Degrees Conferred 2014-2015 by Gender

Women in the Workforce: Are More Educated

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Women earn, on average,

$.80 every $1.00a man earns1

United States Department of Labor, Women’s Bureau Labor Force Participation Rates, 2016Payscale survey of 200,000 workers, 2017

Women in the Workforce: The Pay Issue

But when comparing same jobs and qualifications, it’s

$.98 on the $1.002

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39% of women work in occupations where women make up at least three-quarters of the workforce. Many are hourly paid; many require degrees.

US Department of Labor Women’s Bureau 2016

98%

Speech Language Pathologists

77%

K-12 Teachers

93%

Dental Assistants

82%

Social Workers

Women in the Workforce:Take a Leading Role in Many Occupations

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United States Department of Labor, Women’s Bureau Labor Force Participation Rates, 2016

47% of women are in the

workforce Women ages 55-64 are 20% of all women in the workforce age 25

and older

Women in the Workforce: The Working Numbers

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A Look at Baby Boomers

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Since 2010, approximately

10,000 Baby Boomers

turn age 65 every day– this wave will continue through to 2029

Baby Boomers: The Retirement Wave is Here

14B-19

Select retirement resources for all households age 55 to 64No DB Plan

or retirement savings

29%DB Plan but no

retirement savings

23%

Some retirement

savings

48%

41% have no retirement savings

20% have $1-$50,000

8% have $50,001-$99,999

31% have $100,000 or more; 15% of whom have over $500,000

Baby Boomers: Retirement Savings, Hmm . . .

US Government Accountability Office: Retirement Security, Most Households Approaching Retirement have Low Savings, May 2015. 2013 dollars.

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1 EBRI - History of 401(k) Plans: An Update, 20052 PEW analysis of 2012 Census Bureau Survey of Income and Program Participation data

1978 1982 1990 2012

Oldest boomer was 32

The Revenue Act of 1978

passed1

First 401(k) offered 1

97,614 plans exist with 20 million

participants1

Oldest boomer was 44

Oldest boomer was 66

30% of Boomers did not have access

to a defined contribution plan.2

Baby Boomers: The Defined Contribution Plan Came Late For Many

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Bureau Labor Statistics - Pension coverage by major employer type 2013

Union Workers

67%

Public Sector Private Sector

13%

Pension benefits still supports manyboomer women and hourly wage earners

78%

Who is covered by a pension plan?

Baby Boomers: Pension Benefit is There For Many

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$200,000 + source: Retiree Insights Journey Mapping Study, Greenwald & Associates and Diversified Services Group, July 2016All source: Lightspeed/Mintel, January 2015

26%11%

27%

80%

25%40%

Estimated Expenses in Retirement Did a Written Retirement Plan Sought Social Security Help

All Boomers

Boomers Investable Assets $200,000+

Baby Boomers: Could Pension Explain Why Planning is Lacking by Many But Done by Some?

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Debt and continued mortgage payments are a reality

Baby Boomers: Expenses are Not Going Away

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65% have children

1/3 are providing financial support to their children17% Adult Children13% Minor Children

42% have a parent age 65 or older and a financial dependent child

Pew Research Center, 2017

Baby Boomers: Planning Will Be Important

50% (close to) will have been divorced by age 65

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• Gaming 53%• Bartenders 53%• Flight Attendants 51%• Machine Operators 50%• Switchboard Operators 50%

Sources: Fessler, Leah, "The occupations with the highest and lowest divorce rates in the US," Quartz, 9/6/17;U.S. Department of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, 12/17/15.

Top professions for highest divorce rate

Baby Boomers: Who’s on the Top 10 List For Divorce?

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While 38% project retiring at 70 or older (or never)1 . . . Ages 55 to 64 62.5% are working today2

Ages 65 to 74 only 18.6% are working today2

1 Employee Benefits Research Institute and Greenwald & Associates, 2017 Retirement Confidence Survey2 Bureau of Labor Statistics June 20183 Center for Retirement Research at Boston College, 2018

Who started Social Security benefits at age 62 in 2017? 3

42% of eligible men and 48% of eligible women

Baby Boomers: 65? Or 70? What’s the Reality?

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Motley Fool. April 2015. How Much Will I Get From Social Security If I Make $50,000? Nov 2016. Average indexed monthly earnings assumption $4,167 per month

Baby Boomers: Will Social Security Be Enough . . .

Social Security won’t be

enough for the $50,000

a year worker

At age 62, the monthly

Social Security benefit is about $1,360

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$24,500 a year at age 50

$947,690at age 70

Baby Boomers: It’s Never too Late to Start Saving

$24,500 per year contribution for 20 years, 6% annual rate of return. No company match. No change in contribution amount.

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Support For Retirement PlanningCase Studies

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Plan Design Engagement

Retirement Planning:Opportunities for Outcomes

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2009Auto-enroll with auto-escalate to

match PLUS 1x retro auto-enrollment occurs

63%

83%

81%

2013 91% of newly eligible employees enroll with auto-enrollment

2016: 9.75% of newly eligible employees actively enroll

2015: Sponsor removes auto features

Case study: 100,000 life grocery chain and logistics employer and impact of adding and then removing auto enrollment

Source: Voya Financial

64%2008

84%

Retirement Planning: Power of Auto Enrollment

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$7,099

$64,162

Case study: 24,000 employees of a large state county with an active pension benefit—percent contribution in 403(b) introduced after dollar amount

Retirement Planning: Value of a Percent of Pay Over a Dollar Amount

$7,009

$21,535

$37,542

$64,162

$2,069 $9,736

$31,342

$55,034

Under 30 30 - 39 40 - 49 50 - 59

Saving a Percent over a Dollar Amount and Balance by Age

PercentDollar

6.4%$51 $675.3% 5.3% 5.0% $109 $152

Source: Voya Financial

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Case study: 57,000 employees of a national clinical care organization with over 3,000 locations. 60% female. Auto enroll at 6% but did not have a match

Goal: Increase participation and savings rates, reward tenure, encourage retention.

Strategy: Introduce a company match $.50 for every $1 up to 6% of pay.

Results

Retirement Planning: Value of a Match

86.0%80.5%

7% 8%

28,335 18,630

Participation

Savings Rate

Saving 5% or less

Pre Post

Source: Voya Financial

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98% good

48% had inappropriate risk

and/or were inefficiently diversified

Automatic re-enrollment into management accounts

unless opted out

Three months post, only 2% of the 48% had inappropriate

risk or diversification

48% poor

52%good

57%stay in

43% opt out

2%

Case Study: 32,000 geographically disperse workforce focused on high-quality home goods manufacturing and sales

Retirement Planning: Managed Accounts Support Effective Diversification

Source: Voya Financial

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Av. Hourly Pay: $14 general workforce to

$30/hour for nurses

1,038 individuals found average of $90,541 each

in additional Social Security benefits

Av. Hourly Pay: $25/hour

1,662 individuals found average of $106,712 each in additional

Social Security benefits

Case study: Three different employers with similar resulting benefit for employees

Retirement Planning: Value of Social Security guidance

State Government Logistics Provider

Av. Hourly Pay: $17/hour

2,061 individuals found average of $119,293 each in additional

Social Security benefits

Acute Care Provider Logistics Company

Source: Voya Financial

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Be Relevant

Hourly Pay Examples

Investment Risk Relationships to Daily Life

Women’s Guides

Retirement Planning: Connect with Communication and Education

Know Your Audience

Adjust Seminar Delivery

Consider Shift Schedules

15 Minutes Sessions

Saturday Family Events

Women’s Only Sessions(with sitters)

Advocates to Support

Manager Huddles

Cultural Leaders

Women’s Groups

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Case study: 12,000 life employer with three unique segments; cash balance plan and 401(k) with auto enroll and auto escalate. Lack of employee engagement.

Three Audiences Tailored Solutions Collective Results

Call Center Online Manager Tool Kit Breakroom Worksheets and Flyers Animated Video

100% of employees reached an average of 1.5 times

90% field attendance at Worksite Sessions

11% attended a Lunch & Learn

61% sought advice

24% at 0% restarted

47% increased savings rate

54% improved investment allocation

Average income replacement 66%

Field 15 Minute Worksite Sessions with

post Q&A Mail to Home

Management and Technical

Lunch and Learns 1:1 Personal Planning Intranet Portal Messaging

Retirement Planning: Value of a Segmented Strategy

Engagement

Source: Voya Financial

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• Hourly wage earners and women matter in the workplace

• Know your audience and recognize their unique needs

• Plan design changes are the fastest route to outcomes

• Engagement is important; meet them where they are

• Set goals and measure impact, refine

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Sodexo, Inc.

14B-40

Sodexo, Inc.: Company Overview

• Develop, manage and deliver a unique array of On-site Services, Benefits and Rewards Services and Personal and Home Services for all our clients to improve the Quality of Life.

• In North America alone, we serve 13,000 client sites.• Industries we serve: Corporate, Education, Government, Health

Care, Senior Living, Sports and Leisure.

On-site Services Food ServicesFacilities

Management

Source: SodexoUSA.com

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Sodexo, Inc.: About Our Employees

• 133,000 employees in North America• Salaried and hourly, full-time and part-time workforce

– Salaried to Hourly Ratio 20:80– Male to Female Ratio 40:60

• Benefits include retirement and savings plans, medical, dental, vision, disability and life insurance, tuition reimbursement, LifeWorks and flexible work arrangements and paid time off

• Employee Benefits Resource Groups including Women Network Group

Source: SodexoUSA.com

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Sodexo: Our 401(k) Plan

• Auto enroll at 1%; auto escalate by 1% annually until at 3%; invested in target retirement fund

– Did a 1 time retro auto enrollment when auto enrollment was first introduced to Plan

• Company match: $.50 for each $1 up to 6% of pay contributed• In-plan advice and managed accounts • HCEs are capped but have a deferred compensation plan they can

participate in

85.3%participation

99%Enroll

through auto enrollment

$14,000Average balance

3.4%Average

deferral rate

52%Average projected income

replacement

Source: Sodexo and Voya Financial

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Non-HCE hourly and salaried employees by deferral rate and years of service

Source: Voya Financial

0%

1 to 3%

4 to 5%

6%

7 to 10%

11%+

12 Years

9.5 Years8.5 Years

9 Years

11 Years

Salaried

Def

erra

l Rat

e

9.5 Years

11 Years

13 Years

7 Years

10 Years

Hourly

4 Years

4 Years

Sodexo: Deferral Rates and Tenure, by Group

14B-44

Engagement Campaign

Goal: Get employees on the Plan Website

Why:

• Online users save an average of 6% while non-users save 2.7%

• Capture email addresses

How:

• Multi-media program

• Leveraging managers

• Quarterly $1000 gift card drawing

• Webcasts 3 x a day 5 days a week

Sodexo, Inc.: Current Areas of Focus

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Thank You!

Questions?

14B-46