More than half of Intel’s 82,500 employees reside in the U.S., a fact that explains why the multinational tech company considers its employees to be the linchpin in its retirement benefits structure.

The average age of an Intel employee is 42, said Stuart Odell, assistant treasurer, retirement investments, with Intel Corp., and who shared his insights about how Intel’s reenrollment campaign delivers better outcomes for participants at this year’s DC Plan Summit in February. For the most part, about 45,000 participants are invested in a single pool, or master trust, valued at US$10 billion, and feature three qualified retirement plans.

Intel’s position of strength stems partly from a re-enrollment campaign that was designed to improve participation back in 2011. At that time, virtually all participants were invested in the same legacy investment options that had been in the plan since the mid-’90s. The problem was inertia, and the chosen solution was to better diversify participants and get them to save more.

To achieve its goals, the firm created target-date portfolios in-house and leveraged its 401(k) plan structure, which consists of an investment lineup made up of a set of target date funds (TDFs), core asset class investments and a brokerage account.

Three steps to simplicity
First, the company reduced the number of options in the asset lineup to 17 from 72. However, participants were not deprived of choice; they were obliged to fill out a paper form and mail it in if they wanted to access various investment choices.

This was a significant change and had a huge impact on participant behaviour because “Intel is a 100% online company,” said Odell.

Second, it forced participants to make an active decision. Participants had to stipulate where they wanted to invest. But if they did nothing, Intel would default them into a TDF.

Third, Intel allowed more flexibility around the way participants defer their contributions to retirement. Out of Intel’s 50,000 U.S. employees, 5,000 had never saved a penny, Odell said. Therefore, Intel made the decision to auto-enrol these employees and auto-increase their contributions every year until they reached 10% of their salary.

Opting in
“One thing I will say is that employees are very skeptical of what we’re doing,” said Odell. But the proof is in the numbers, and, to date, 60% of those auto-enrolled have not opted out.

While Intel does not match contributions into the 401(k), participation rates are now at 90%, and 3,000 of the 5,000 employees who had never before contributed to their own retirement are currently enrolled in the plan.

From a problem statement that showed three out of four participants were not appropriately diversified and where 50% of participants were not saving enough for retirement, Intel’s re-enrollment campaign offered far-reaching results that even it had not anticipated.

“It was a big effort,” said Odell. But this was only about trying to help employees retire more comfortably and to get them better allocated.

This article is the third part of a series of articles from the DC Plan Summit. The other two parts are Inbound Calls and How M&S implemented auto-enrollment.

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