Podcasts

The Setting Every Community Up for Retirement Enhancement Act or “SECURE” Act that became law on Dec. 20, 2019, includes “many provisions to encourage employers to adopt new (retirement) plans or enhance their current plans and to provide more savings opportunities for employees,” according to Sharon Severson, CPC, consultant with CUESolutions Platinum provider CUNA Mutual Group, Madison, Wisconsin. The act is the largest package of retirement system changes in more than a decade.

Severson says she’s most excited about some of the changes to individual retirement accounts that became effective Jan. 1, 2020, and open multiple-employer plans options that will become effective Jan. 1, 2021.

“The rules governing IRAs impact most individuals at one time or another during their careers,” Severson explains. “Most of us have heard along the way about the age 70.5 or the required minimum distributions. Now those distributions must begin at age 72 instead of age 70.5 if the individual has not already turned 70.5 by 12/31/2019.” 

The upshot is that people who want to can save longer—and that’s a big benefit to people who keep working even in retirement. “This may be helpful for credit unions when assisting their members with their questions about IRAs or for credit unions that offer investment services to members,” Severson notes.

Multiple-employer plans have been around for a long time, but the act creates the opportunity to form a new kind of MEP. “The Act allows for the formation of a 401(k) plan that includes two or more unrelated employers and this plan type is now being referred to as a ‘PEP’, a pooled employer plan,” Severson says, “and hopefully this will allow smaller employers to obtain an economy of scale that can lower both employer and employee costs.”

In the show, Severson says she is glad that the Act expands retirement savings options for certain long-term part-time employees. She also thinks credit unions will also want to learn more about the Act’s changes to the minimum employer contributions for safe harbor plans.

The new Act also provides a pathway for plan participants to receive an annual disclosure of projected monthly income from their retirement savings plan. According to Severson, this disclosure has “been on the Department of Labor’s to-do list” since 2006 and will still take some time to implement. The Department of Labor needs to provide a model disclosure and a set of uniform assumptions that can be used to generate these projections “so that if you move from a plan provider to another plan provider, those projections are relatively stable.”

“Many people don’t know how much (money) they need” for retirement, she explains in the show. “They’re surprised when they get to retirement that their nest egg isn’t really what they needed after they stopped working. The illustration would help participants make adjustments in that savings plan with this information in hand.” 

The show also gets into:

• More details about the new pooled employer plans
• More details about what long-term part-time employees may now participate in retirement savings plans
• More details about the changes to the rules for employer contributions and other aspects of safe harbor 401(k) plans
• Increases in retirement plan penalties
• Suggestions for how to learn more about the SECURE Act
• More details about when the various changes take effect

When people think about marketing departments, they often think about a group of people that create ads and brochures. But, according to Amy Herbig, the marketing department is, at its core, the “key communicator” for a credit union. And that is a very central and very important role as credit unions respond to the COVID-19 pandemic.

“Everything that is going on right now is being channeled through marketing,” says Herbig, CEO of The BA Group, Northfield, Minnesota, in the show. While every role at the credit union is especially busy right now, “marketing is the catalyst for all that information to be disseminated to the member and to the community at large.”

What’s the key message marketers need to be promoting to the credit union’s stakeholders at present? “We are still a strong, solid financial institution.”

Marketers are also becoming de facto public relations reps, Herbig says, as they manage all of a credit union’s communications channels—from email to social media to the website.

Marketing is always important but it’s currently more critical than ever she says, as it takes care to ensure your information is perceived correctly and to manage any misinformation that is presented to your audience.

Most marketing plans and budgets were approved in December 2019 or January 2020. Then marketing had “two good months of really starting to get off the ground” before everything came to a halt due to the pandemic, Herbig says.

Rather than following their original plan, marketers are “having to now act more on the fly,” she explains. “A good marketer is more proactive than reactive but ready to be reactive when called upon. Currently we’re in a constant state of reactive.”

Indeed, she says that whatever was planned for the marketing focus for a particular month may have to change based on the new landscape. Herbig cites the example of a $210 million credit union that’s managing $7 million coming in from federal stimulus checks. How will that impact its upcoming audit? How will that affect its lending?

A credit union’s top marketers need to be brought into the high-level meetings that consider all of these kinds of issues so they are best positioned to get appropriate messages out to members and the community, Herbig emphasizes.

The show also gets into:

• Considerations for copyrighting during this uncertain time
• The importance of making sure the credit union is prepared to deliver on any messages put out to members or the community
• Examples of what credit unions are currently doing to reach out to members
• The current effectiveness of the CU philosophy “people helping people”

When Tim Green first heard—back in January—the news about the spread of COVID-19 overseas, he decided to lead his credit union to prepare for a scenario in which the disease would shut down the whole county where his credit union is located. 

He says he thought at the time that if the situation turned out to be less dire, his team would still benefit from the exercise. When Los Angeles County, California, did in fact close down, Tim and his team at $1.8 billion F&A Federal Credit Union in Monterey Park were more ready than most businesses.

Having antennae out to market signals and being open to responding to them is a hallmark of great leadership. And yet Green is most humble in this show. CEO for just about 13 months, he is grateful to his board for their support of this initiative. He’s grateful to other financial institutions for the ideas he “stole” from them and adapted to best suit his credit union. 

Green explains in the show that one of the first things he started working on when he joined the credit union was operational readiness—determining what was effective and what wasn’t in terms of people, systems and processes. A key thing he found was that “we were very adept at disaster recovery, but what also became pretty apparent was that our business continuity planning was not where we wanted it to be.”

In January, when the focus narrowed to preparing for the closure scenario, “we really went through it in a sequential way. We ordered a bunch of equipment. … The processes were tested. We tested in our training environment, then we moved people remotely. By the time we got to the first week in March, we were really ready to handle this and operate 90% of the core credit union functions remotely. 

“Once we had operational readiness,” he continues, “… the first thing we needed to do was think, ‘How are we doing to take care of our members?’” Among other programs, the CU offers members financially affected by COVID-19 enhanced skip-a-pay and a short-term assistance loan.

A third leg of the stool was employees. “We were able to move about 75% of our back-office staff out of the building (the CU has two branches) and about 70%” of all staff, he explains. “We gave everybody on the team below vice president a free week of PTO … and immediately the goodwill started to flow back from our employees." 

The CU closed its headquarters branch to walk-in traffic to better protect staff. The other branch has a bandit barrier between staff and members. The credit union also is paying branch workers a short-term 30% raise and catering lunch daily, so staff don’t have to leave the building to pick up food.

“Because we were ready to serve operationally, we were then able to really reach out and provide tangible benefit to our membership, simultaneously demonstrating a commitment to our employees that had carried us through thus far.”

The show also gets into:

• How Green’s risk management background informed his credit union’s response
• The thing that has worked best for F&A FCU in its pandemic response 
• How F&A FCU’s response reflected its values--what its leadership thought was the right thing to do
• What F&A FCU might do next in its pandemic response effort
• Green’s concerns about the economic recovery and helping members through that