7 Ways to Lobby for a Better 401(k)

Your employer may be big, it may be bureaucratic, it may seem as if your voice could never be heard beyond the confines of your own office. But if you ask Leon Winer, he'll tell you: You can make a difference when it comes to your retirement plan. Winer is a marketing professor at Pace University in New York City. A few years ago, he got fed up with the investment options he was being offered in his retirement account -- a slate of funds managed by the giant College Retirement Equities Fund -- and he decided to do something about it.

After a year of needling administrators, organizing a grassroots protest, and giving presentation after presentation on the inadequacy of the CREF options, Winer convinced Pace to offer an additional 10 funds managed by Fidelity, a major improvement. From his experience and that of others, we've put together these seven recommendations for anyone interested in taking on their own benefits department.

1. Get Involved
Although your 401(k) may seem set in stone, the reality is that plans change fairly often. A recent study by the Investment Company Institute, a mutual fund trade group, found that about one in 10 companies with a 401(k) reported that it was likely to switch investment managers the following year. Almost one in every five companies expected to add new investment options. Your company may be contemplating just such a change, in which case it might be ripe for employee input -- or a least not as close-minded as you might expect. "Employees should get involved," says Ted Benna, president of the 401(k) Association, a benefits consulting firm in Langhorne, Pa. "It's their plan. They need to ask for what they want."

2. Speak Up!
It seems obvious, but letting yourself be heard is the first step toward convincing your company it has a problem with its retirement plan. Many employees are confused and unhappy, but are too intimidated to do anything at all. If you voice your concerns about your plan, you may find out there's a solution you didn't know about. Or, you may discover that your concerns are widespread, in which case you find allies in your battle for change.

3. Enlist the Benefits Director
The administrator in charge of your company's benefit plans may seem like the enemy. But often, big decisions about the retirement plan (level of match, scope of investments) are made higher up. Indeed, the benefits department may see as many holes in your plan as you do and can be highly supportive in your efforts to convince management there's a problem. If the benefits director is in charge, then approaching him or her with a rational explanation of your complaint may be enough to make the difference or at least get the wheels moving. You might start with a letter requesting a meeting. Follow up with a phone call.

4. Do Your Own Research
Winer's discontent began when he determined that the returns of CREF's actively managed "stock account" trailed the S&P 500 over a period of years. In his case, research included building a complex set of spreadsheets to compare CREF to other funds, for which a Ph.D. from Columbia Business School certainly helped. But it needn't be that complicated. If you want to add a mutual fund, call the mutual fund company and get some information on management style and performance history. Build a case why that fund meets the needs of an employee like you (not just you alone) in ways current offerings can't. If your company is wimpy when it comes to matching, find out what some of its competitors do. Currently, about 85% of plans match some or all of employee contributions, according to consulting firm KPMG. Forty percent of companies the firm surveyed match 50% of employee contributions, 16% match 25% of employee contributions and 13% match 100%. Of the plans that provide matching funds, the average limit on the amount of employee contributions eligible for matching was 6.5% of pay. Such information can help bolster an argument that your company's retirement plan is non-competitive. The better informed you are, the more persuasive you'll be.

5. Organize
If you have no luck with the benefits department, your next step is to solicit help from a company-sponsored employee group. If you work in a union shop, talk to your union representative. If the company has an employee representative on its benefits committee, talk to him or her. Or ask to join the committee. You can also begin a grassroots movement by organizing your colleagues to write the benefits department or otherwise complain to the higher ups. This requires plenty of energy and time. And you're likely to get the cold shoulder from some colleagues who would rather not be bothered. But strength in numbers is a powerful concept and diminishes the impression that you are some random crank.

6. Go to the Top
As a last resort, go directly to the company president or the top executive in charge of benefits. Winer's breakthrough came after buttonholing the Pace University provost at a lunch meeting in order to plead his case. At Octel Communications in Milpitas, Calif., the company didn't match employee contributions until a small group of workers organized and sent their complaints directly to the president's office. One employee, Louise Cox, did like Winer: She cornered a company vice president in the lunch line and lectured him on the benefits of matching. She also asked the chief executive about matching at every quarterly staff meeting.

7. Be Patient
It's important to remember that this process doesn't happen overnight. It could take as long as a year of persistent effort to get anybody to budge. And even if your company does decide it wants to change, it might not be in exactly the way you wanted. It will likely also take time for your company to research the options for itself and cut the requisite deals to make the changes a reality. Altering your retirement plan is not to be taken lightly -- in Winer's case it required almost obsessive commitment -- but the payoff can last a long time.