10 Steps to a Return-to-Work Preparedness Plan

Across the country, states are easing coronavirus-related restrictions, and now hosts of new workplace issues are emerging – along with the over-arching question of what the work environment will look like as businesses strive to protect the health of employees and customers. For several weeks, non-essential businesses and their employees have ridden out the “stay at home” mandates, but the next phase may not be so temporary. The path forward is uncharted and made even more challenging as the reopening guidance, which varies by state, evolves almost daily. Businesses need a return-to-work plan.

While many organizations have successfully equipped employees to work remotely during the COVID-19 pandemic, numerous others are unable to conduct business in a virtual atmosphere. They cannot provide their products or services through a remote work model. And to make matters worse, the economic crash has resulted in a devastating loss of customers. 

10 Steps to a Return-to-Work Preparedness Plan

Adapt to Reach “New Normal”

Edging back into a functioning physical work environment may feel like walking a tightrope: relying on a confidence that feels threatened; advancing with cautious, considered moves; and finding and maintaining a center of gravity because organizations are vulnerable to the unexpected.

The overwhelming considerations business face to protect the health of their employees and customers are strategic and tactical:

  • Leadership challenges
  • Re-engaging a potentially fragile workforce
  • Modifying workplace practices and the work environment to safeguard employees, customers and vendors 

Now is a good time to borrow and adapt strategies from the manufacturing industry’s playbook, where safety in the workplace has been front and center since the Occupational Health & Safety Administration (OSHA) was established in 1971.

With so much to consider, it’s important to take a structured approach to prepare a return to a business as (nowhere near) usual environment. Social distancing, virtual meetings, protective equipment and the need to avoid travel must be incorporated in the workplace.

Re-engaging employees is crucial: they need to feel motivated, valued and productive. But first things first: one of the basic needs that humans share is a need for safety and security. It’s unlikely that employees will feel motivated, valued and productive if they don’t feel safe. Now is the time to manage and mitigate the risk.

The best approach is a measured one, customized to accommodate the varying levels of health risk being faced and implementing practices that achieve a balance between acceptable levels of business performance and acceptable levels of relative risk.

Return-to-Work Plan: 10 Steps

It’s time to take action. Beyond requirements at the state level, every organization should have a preparedness plan based on an assessment of physical and operational risks specific to their organization – and in many cases, the plan will need to be customized to specific types of employees.

1. Create a committee of key stakeholders to ensure that there will be a dedicated focus to implementing and managing a safe space and safe practices. In addition to a committee head, include employees from all functional areas of the organization: operations/production, administration, and line staff. 

2. Identify external technical resources to assist with technical issues and risk management. In small organizations, or in organizations where staff is at capacity, engage third-party resources who can help. These could include human resources consultants, safety consultants, and legal experts.

3. Develop and document a communication plan which focuses on educating the workforce and regularly reporting results and critical issues. Consider the “Stop Start Continue” approach:

  • What do we need to start doing immediately? 
  • What do we need to stop doing? 
  • What current practices will continue to work well and how can we sustain them? 

This will be an iterative process, and its value hinges upon monitoring, reporting, learning from near misses and being agile enough to recalibrate as needed.

4. Understand the legal requirements specific to employment law, and be aware of what may not be required but may work well in your organization.

5. Assess the infrastructure to make sure that communications and technology platforms will meet increased demands.

6. Reconfigure workspaces or practices to keep employees at a safe physical distance from each other. If you have an open workspace, it may be difficult to keep employees six feet apart. Cubicle walls of an appropriate height can solve this problem. Evaluate operational ways of reducing the likelihood of exposure: staggering work shifts, downsizing operations to allow for appropriate social distancing, etc.

7. Identify potential sources of COVID-19 that employees may be exposed to through the nature of their work and also the current risk factors in the local community. The plan should clearly address your approach to minimizing the risk.

8. Determine the risk that travelers from other cities, states or countries have on your employees.

9. Implement precautions for employees with individual risk factors due to age, chronic medical conditions or other health issues that place them at risk; as well as for employees who have immediate family members who are at risk.

10. Establish strategies for conducting business with a reduced workforce due to staffing cuts and/or unexpected absenteeism (cross-training and skill development, leveraging digital learning where possible).

Assess Coronavirus Risk

An employer may have varying levels of risk to the novel coronavirus, based upon different types of jobs performed, geographic locations and the current physical work environment. Lower levels of coronavirus risk include jobs that have minimal occupational contact with other workers or the general public. 

Jobs in the medium health risk category typically require frequent and/or close contact with people who may have been infected but are not known or suspected patients. This could include frequent contact with the general public and/or frequent contact with travelers.

Jobs with high or very high potential for Coronavirus exposure include those delivering general healthcare, medical or mortuary services, and those performing specific types of medical and lab procedures.

Note that each state where you have business locations may have differing requirements. The matrix below illustrates a high-level overview of considerations applicable to all organizations, the potential health risk by job setting; and outlines important factors to consider before resuming operations.

Considerations

Job SettingRisk LevelAdministrativeWorkplace PracticesWorkplace Environment
AllVaries 
  • Document policies for reducing risk of exposure
  • Implement a communications plan
  • Train employees on new practices
  • Minimize contact among workers
    (remote working where practical, virtual meeting, restricted travel)
  • Provide hand sanitizers, tissues, no-touch trash bins; supplies for disinfecting workspaces
  • Post hand washing signs and instructions
  • Improve ventilation
  • Install high efficiency air filters
  • Ensure work environment is cleaned and sanitized

Specific Considerations

Job SettingRisk LevelAdministrativeWorkplace PracticesWorkplace Environment
Healthcare / MedicalVery High to High
  • Enhance monitoring of employees
  • Job-specific training
  • Make counseling available
  • PPE appropriate for the job (gloves, gown, shield, mask respirator)
  • Specialized ventilation
  • Isolation rooms where needed
Community Setting (general public schools, high density work places)Medium
  • Communicate availability of medical screening
  • Keep customers and vendors informed of safety practices
  • PPE appropriate to the risk level and job setting (mask, gloves)
  • Physical barriers where appropriate
    (drive through service for customers; shields/sneeze guards)
Production EnvironmentMedium
  • Consider staggering shifts
  • Modify staffing levels to maintain safe distancing
  • PPE appropriate to the risk level and job setting
  • Where appropriate, limit customers and the public’s access to the worksite
  • Physical barriers where appropriate
Field Service (non-medical, non-community setting)Medium to Low
  • Keep customers and vendors informed of safety practices
  • Determine if work can be performed during times where less interpersonal contact is likely
  • Use a face mask if required
  • Continue to use PPE that would normally be used for the job
 
Sales (outside / field sales)Medium to Low
  • Work remotely when possible
  • Conduct virtual meetings
  • Use a face mask if required
 
OfficeLow
  • Keep customers and vendors informed of safety practices
  • Ensure workspaces allow for appropriate distancing
  • Continue to allow staff to work remotely when feasible
  • Allow scheduling of hours that will reduce number of employees on site
  • Use a face mask if required
  • Where appropriate, limit customers and the public’s access to the worksite
  • Install physical barriers (cubicle walls) where appropriate distancing is not possible

Guide Employees through Change

These are monumental changes that pose logistical, financial, operational and cultural challenges. They require the formation – and consistent reinforcement – of different approaches and new habits and behaviors. Leadership and communication are more critical now than before the COVID-19 pandemic, as many employees will feel vulnerable for quite some time. 

Making changes to the physical environment and to workplace practices is part of the solution, organizations must also re-engage employees through sustained communication, a willingness by leadership and employees to adapt to these changes, and resources to ensure that employees know that their well-being is the first order of business.

For more information on return-to-work readiness, contact Sandy Turba at Sandy.Turba@findley.com or 216.875.1937 or Dan Simovic at dan.simovic@findley.com or 216.875.1917

Published May 18, 2020

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Copyright © 2020 by Findley, Inc. All rights reserved.

GE pension changes: should my company be looking to do the same?

On October 7, General Electric (GE) announced a series of decisions around their salaried pension plan:

  • For participants continuing to accrue benefits, further accruals will be stopped at the end of 2020. (New employees hired after 2011 were not eligible for the pension plan.)
  • A lump sum buy-out proposal to 100,000 terminated but not yet retired participants will be offered.
  • Benefits in a supplemental plan for certain executives will also freeze.

Inevitably, whenever one of the largest pension plans in the country makes an announcement like this, it can cause executives at other companies to question if a similar decision makes sense for their plan.  The action item here most germane to other plan sponsors, and the focus of the remainder of this article, will be to focus on the middle bullet point.  Offering lump sums to non-retired, terminated participants has become a popular strategy among pension plan sponsors the last couple years as a way to reduce headcount without paying a premium to an insurance company to off-load the obligations.

Lump Sum Cashouts Defined

A Lump Sum Cashout program occurs when a defined benefit pension plan amends its plan to allow terminated vested participants to take a lump sum payment of their benefit and be cashed out of the plan entirely. The program is typically offered as a one-time window.  Plans generally may offer this type of program only if their IRS funded percentage is at least 80% both before and after the program is implemented.

Many pension plans have offered, or at least considered, Lump Sum Cashout programs over the last several years to minimize their financial risk. Plan sponsors that have implemented these programs have been rewarded with significant cash savings as well as risk reduction.

Advantages of Implementing Lump Sum Cashout Today

1. Improved Funded Status

An advantage of the current interest rate environment is that lump sums will be less than most other liability measurements related to the plan. Employers will be paying benefits to participants using a value less than the balance sheet entries being carried for those benefits in most cases. These lower lump sum payments will then help employers improve the funded status of the plan in addition to de-risking or reducing the future risk.

2. PBGC Premium Savings

The most significant benefit of offering a Lump Sum Cashout Program is the Pension Benefit Guaranty Corporation (PBGC) premium savings. The PBGC continues to increase the annual premiums that pension plans are required to pay to protect the benefits of their participants in the pension plan. The per participant portion of the premium (flat-rate) is now up to an $80 payment per participant in 2019. This is more than a 200% increase since 2012. The variable rate portion of the premium is up to $43 per $1,000 underfunded which is an increase of almost 500% since 2012.

These rates are expected to continue to grow with inflation each year. Therefore it is ideal for pension plan sponsors to reduce their participant count sooner rather than later so they can save on these future premiums. In total, some pension plan sponsors could see annual PBGC premium savings of over $600 for each participant who takes a lump sum distribution.

Other Considerations When Planning for a Lump Sum Cashout

There are some concerns that pension plan sponsors will also want to consider such as:

  • Potential increases to contribution requirements;
  • One-time accounting charges that could be triggered;
  • Potential increase to annuity purchase pricing upon pension plan termination. Note that a permanent lump sum feature may increase pension plan termination annuity pricing and cause some insurers to decline to bid.

The pension plan’s actuary should be consulted so they can properly evaluate the impact of offering such a program.

Some pension plan sponsors use lump sum cashouts as part of their pension plan termination preparation strategy. This Findley article provides tips to map your route to pension plan termination readiness. Already have a frozen plan and been considering a termination in the near future? For a complete A-Z walkthrough, check out our guide below.

Questions? Contact the Findley consultant you normally work with, or contact Amy Gentile at amy.gentile@findley.com, 216.875.1933 or Matt Klein at matt.klein@findley.com 216-875-1938.

Published on October 8, 2019

© 2019 Findley. All Rights Reserved.

More Pension Lump Sum Cashout De-risking Activity Expected in 2019

Pension plan sponsors looking for significant cash savings and de-risking opportunities have another favorable environment to pull the participants’ lump sum cashout lever this year. But that lever includes several options and considerations. In 2019, the interest rate environment is favorable which gives pension plan sponsors an opportunity to provide lump sum payments to participants while improving the funded status of the plan. So why wait to offer this cashout opportunity when you have this significant benefit staring you right in the face?

Lump Sum Cashout Opportunity in 2019

Lump Sum Cashouts Defined

A Lump Sum Cashout program occurs when a defined benefit pension plan amends its plan to allow terminated vested participants to take a lump sum payment of their benefit and be cashed out of the plan entirely. The program is typically offered as a one-time window but can also be made a permanent feature of the plan with potentially significant financial impact. Plans generally may offer this type of program only if their IRS funded percentage is at least 80% both before and after the program is implemented.

Many pension plans have offered, or at least considered, Lump Sum Cashout programs over the last several years to minimize their financial risk. Plan sponsors that have implemented these programs have been rewarded with significant cash savings as well as risk reduction

Advantages of Implementing Lump Sum Cashout Today

1. Favorable Lump Sum Interest Rate Environment

In 2019, the lump sum interest rate environment is favorable for most employers thanks to a significant interest rate increase during 2018 when lump sum interest rates are locked in for 2019 calendar year plans. These higher rates will result in smaller lump sum payments when compared to 2018 (15-20% decrease).

2. Improved Funded Status

Another advantage of the current interest rate environment is that lump sums will be less than most other liability measurements related to the plan. In other words, interest rates used for 2019 calendar year plans to determine accounting liabilities are lower than lump sum rates. Therefore employers will be paying benefits to participants using a value less than the balance sheet entries being carried for those benefits. These lower lump sum payments will then help employers improve the funded status of the plan in addition to de-risking or reducing the future risk. This interest rate arbitrage is not expected to exist in 2020 since defined benefit lump sum interest rates have continued to decrease since the beginning of 2019.

3. PBGC Premium Savings

The most significant benefit of offering a Lump Sum Cashout Program is the Pension Benefit Guaranty Corporation (PBGC) premium savings. The PBGC continues to increase the annual premiums that pension plans are required to pay to protect the benefits of their participants in the pension plan. The per participant portion of the premium (flat rate) is now up to an $80 payment per participant in 2019. This is more than a 200% increase since 2012. The variable rate portion of the premium is up to $43 per $1,000 underfunded which is an increase of almost 500% since 2012.

HOW TO CALCULATE THE PBGC PREMIUM
Flat Rate (per participant) + Variable Rate = PBGC Premium

These rates are expected to continue to grow with inflation each year. Therefore it is ideal for pension plan sponsors to reduce their participant count sooner rather than later so they can save on these future premiums. In total, some defined benefit plan sponsors could see annual PBGC premium savings of over $600 for each participant who takes a lump sum distribution.

Can You Offer a Lump Sum Cashout More than Once?

Employers that have previously offered a lump sum cashout to participants should be aware that this doesn’t exclude them from pursuing a de-risking program again. In general, as long as plan sponsors wait 3-4 years between similar programs, they can offer the same program to plan participants again. This gives participants who have terminated since the original program an opportunity to take their pension payment. A second round offering also gives participants from the first program a second chance to take a cashout while de-risking the plan for the plan sponsor.

Other Considerations When Planning for a Lump Sum Cashout

There are some concerns that plan sponsors will also want to consider such as:

  • Potential increases to contribution requirements;
  • One-time accounting charges that could be triggered;
  • Potential increase to annuity purchase pricing upon plan termination. Note that a permanent lump sum feature may increase pension plan termination annuity pricing and cause some insurers to decline to bid.

In summary, 2019 is an ideal year given the lump sum interest rates. The current interest rate arbitrage provides pension plan sponsors a low cost opportunity to de-risk the pension plan and save significantly on future PBGC premiums. As with any de-risking opportunity, there are several considerations that should also be discussed. The defined benefit plan’s actuary should be consulted so they can properly evaluate the impact of offering such a program.

Some plan sponsors use lump sum cashouts as part of their pension plan termination preparation strategy. This Findley white paper provides tips to map your route to pension plan termination readiness.

Questions? Contact the Findley consultant you normally work with, or contact Amy Gentile at amy.gentile@findley.com, 216.875.1933.

Published on June 7, 2019

© 2019 Findley. All Rights Reserved.

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