Searles Valley Minerals is a solution mining company that processes brine to produce boric acid, sodium carbonate, sodium sulfate and other such chemical commodities. The company, headquartered in Overland Park, Kansas, has achieved a milestone of 79.5% of its employees being on track to replace 75% or more of their income in retirement, by way of automatic enrollment at 4%, a company match of 50% on the participant’s first 4% of contributions, and a 4% employer nonelective contribution.
While those deferral factors combined mean that every Searles employee who maximizes the match is accruing 10% of his salary to his retirement account each year, in 2016, the company decided to add a 1% automatic escalation feature, up to a 10% cap. The result: In six years’ time, employees will be accruing 16% of their salary. With a participation rate of 96.2%, the plan obviously sees few opt out.
Contributions and Matches
“Isn’t that 79.5% replacement ratio awesome?” observes Benefits Manager Denise Thomas. “The company is paternalistic—very interested in taking care of our employees and doing what’s best for them. It’s gratifying to know we are headed in the right direction.”
Searles’ nonelective contribution and match each exceed the national average, particularly for a mining company, says Vince Morris, president of Searles’ retirement plan advisory partner, Bukaty Companies Financial Services.
Even more impressive: According to Brightscope (owned by PLANSPONSOR’s parent company, Strategic Insight), this formula of contributions and matches puts Searles in the top 15% of all U.S. companies, Morris says.
Bukaty, which began working with Searles in 2014, was instrumental in convincing the company to raise the automatic enrollment amount from 2% to 4% last year, and to change the automatic escalation from opt-in to opt-out, Morris notes.
“The goal was to get to that 10% to 15% savings range,” he says. “We knew that if we could do that, over a career spanning 20 to 30 years, participants would have sufficient replacement incomes. Our goal was, really, about reshaping the company’s plan to getting the employees and the employer to come together and make sure we hit the right targets for everybody, not just the corporate office.”
In fact, Searles was an early adopter of auto-enrollment. The company began using the tool in 2007 but at a 2% level, for fear that workers would balk at a higher deferral amount, Thomas says. Rather, the company found that participants liked having it make decisions for them, so Bukaty’s recommendation, years later, to move to a 4% deferral was easy to accept, Thomas says.
Lifetime Income Score
Searles’ plan’s recordkeeper, Empower Retirement, rolled out a new Web platform last May, which shows participants their lifetime income score as soon as they log in, Thomas says. “Everything is right there on the front page,” she says.
The site lets the participant adjust his own parameters—for example how much income he wants to replace. “If you want your replacement ratio to be 80% instead of 75%, you can make that change,” she says. “It also knocks the income down into monthly dollars. Instead of telling someone he needs $2 million to retire and his reacting by throwing up his hands, the monthly income is easier to grasp, and participants may be more inclined to increase their contributions. We really like the new platform,” she says.
Through Empower, Searles offers participants financial education and managed accounts from Financial Engines. In addition, participants near retirement can elect to work with that financial services company on a drawdown strategy at no additional cost, she adds. “We do have an older work force, with the eldest being 80,” she adds. Searles ran a campaign to inform participants that they can access such drawdown strategies, as well as strategies from Empower.
Loan Restrictions
Searles also leverages Empower’s own targeted communications campaigns, one being to send reminders to participants when they still need to name a beneficiary, another to educate loan-takers about the downside of raiding their account, Thomas says.
Participants’ loan-taking is a concern to her, Thomas says. Half of the employees have an outstanding loan. “People started using their retirement plan like a savings account,” she says.
The company turned to Bukaty for ideas on how to deal with this, Morris notes. The firm presented five alternatives, including to eliminate loans completely.
Afraid that being too severe might prompt people to leave, Searles decided to restrict loans to only the employee’s contributions, meaning employees can no longer borrow against the company’s contributions or match, Thomas says.
The rule went into effect only last year, so Searles has yet to examine its impact, she says. If the impact seems slight, the company might impose a blackout period, perhaps making people wait as long as a year between loans, she says.
Currently, employees may take a new loan as soon as they have paid off the prior one.
This dedication to finding a proper solution exemplifies the ongoing work-in-progress attitude Searles has about improving its retirement plan.
“The HR [human resources] staff and executive team have done an excellent job of keeping up with what is available in the marketplace and have been very open to new ideas about how they can make an appreciable difference for their employees,” Morris says. “We advise 300 plans with $4 billion in assets, and there is a wide spectrum among these plans. Searles is the type of client that, I think, most retirement plan advisers want to deal with. They are engaged, ask the right questions and implements the right policies—as the ultimate goal is the retirement security of their employees.”
Or, as Jane Ravey, relationship manager with Empower Retirement, says, “It’s very clear how much Searles Valley Minerals cares about its employees. Every project and every plan design change has been focused on the participants and the ultimate goal of their replacing income. Working with Searles and Bukaty has been a wonderful partnership.” —Lee Barney
While those deferral factors combined mean that every Searles employee who maximizes the match is accruing 10% of his salary to his retirement account each year, in 2016, the company decided to add a 1% automatic escalation feature, up to a 10% cap. The result: In six years’ time, employees will be accruing 16% of their salary. With a participation rate of 96.2%, the plan obviously sees few opt out.
Contributions and Matches
“Isn’t that 79.5% replacement ratio awesome?” observes Benefits Manager Denise Thomas. “The company is paternalistic—very interested in taking care of our employees and doing what’s best for them. It’s gratifying to know we are headed in the right direction.”
Searles’ nonelective contribution and match each exceed the national average, particularly for a mining company, says Vince Morris, president of Searles’ retirement plan advisory partner, Bukaty Companies Financial Services.
Even more impressive: According to Brightscope (owned by PLANSPONSOR’s parent company, Strategic Insight), this formula of contributions and matches puts Searles in the top 15% of all U.S. companies, Morris says.
Bukaty, which began working with Searles in 2014, was instrumental in convincing the company to raise the automatic enrollment amount from 2% to 4% last year, and to change the automatic escalation from opt-in to opt-out, Morris notes.
“The goal was to get to that 10% to 15% savings range,” he says. “We knew that if we could do that, over a career spanning 20 to 30 years, participants would have sufficient replacement incomes. Our goal was, really, about reshaping the company’s plan to getting the employees and the employer to come together and make sure we hit the right targets for everybody, not just the corporate office.”
In fact, Searles was an early adopter of auto-enrollment. The company began using the tool in 2007 but at a 2% level, for fear that workers would balk at a higher deferral amount, Thomas says. Rather, the company found that participants liked having it make decisions for them, so Bukaty’s recommendation, years later, to move to a 4% deferral was easy to accept, Thomas says.
Lifetime Income Score
Searles’ plan’s recordkeeper, Empower Retirement, rolled out a new Web platform last May, which shows participants their lifetime income score as soon as they log in, Thomas says. “Everything is right there on the front page,” she says.
The site lets the participant adjust his own parameters—for example how much income he wants to replace. “If you want your replacement ratio to be 80% instead of 75%, you can make that change,” she says. “It also knocks the income down into monthly dollars. Instead of telling someone he needs $2 million to retire and his reacting by throwing up his hands, the monthly income is easier to grasp, and participants may be more inclined to increase their contributions. We really like the new platform,” she says.
Through Empower, Searles offers participants financial education and managed accounts from Financial Engines. In addition, participants near retirement can elect to work with that financial services company on a drawdown strategy at no additional cost, she adds. “We do have an older work force, with the eldest being 80,” she adds. Searles ran a campaign to inform participants that they can access such drawdown strategies, as well as strategies from Empower.
Loan Restrictions
Searles also leverages Empower’s own targeted communications campaigns, one being to send reminders to participants when they still need to name a beneficiary, another to educate loan-takers about the downside of raiding their account, Thomas says.
Participants’ loan-taking is a concern to her, Thomas says. Half of the employees have an outstanding loan. “People started using their retirement plan like a savings account,” she says.
The company turned to Bukaty for ideas on how to deal with this, Morris notes. The firm presented five alternatives, including to eliminate loans completely.
Afraid that being too severe might prompt people to leave, Searles decided to restrict loans to only the employee’s contributions, meaning employees can no longer borrow against the company’s contributions or match, Thomas says.
The rule went into effect only last year, so Searles has yet to examine its impact, she says. If the impact seems slight, the company might impose a blackout period, perhaps making people wait as long as a year between loans, she says.
Currently, employees may take a new loan as soon as they have paid off the prior one.
This dedication to finding a proper solution exemplifies the ongoing work-in-progress attitude Searles has about improving its retirement plan.
“The HR [human resources] staff and executive team have done an excellent job of keeping up with what is available in the marketplace and have been very open to new ideas about how they can make an appreciable difference for their employees,” Morris says. “We advise 300 plans with $4 billion in assets, and there is a wide spectrum among these plans. Searles is the type of client that, I think, most retirement plan advisers want to deal with. They are engaged, ask the right questions and implements the right policies—as the ultimate goal is the retirement security of their employees.”
Or, as Jane Ravey, relationship manager with Empower Retirement, says, “It’s very clear how much Searles Valley Minerals cares about its employees. Every project and every plan design change has been focused on the participants and the ultimate goal of their replacing income. Working with Searles and Bukaty has been a wonderful partnership.” —Lee Barney
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