Principal Financial Group

Given that Principal Financial Group, with home offices in Des Moines, Iowa, provides a wide range of retirement plans and employee benefits, it’s not surprising that the company itself has extensive plans: a 401(k), a defined benefit plan, a nonqualified deferred compensation plan and a nonqualified defined benefit plan.

According to Lisa Coulson, vice president of human resources, plan design is vital to the sponsor’s strategy. The 401(k) provides automatic enrollment at 8% with a 75% match of the first 8% of compensation. “Our plan has flexibility for employees to make pre-tax, Roth and/or voluntary after-tax contributions,” Coulson says. “Key plan statistics show the success of the program: The 401(k) plan has a 96.3% participation rate and 10.9% average deferral rate.”

Principal maintains a defined benefit plan through a company-funded cash balance plan with annual pay credits ranging from 3% to 10.50% of an employee’s compensation, depending on the person’s age and years of service. “We treat the cash balance as a cornerstone of our retirement benefits,” Coulson says. “It’s a starting point where employees don’t need to do anything to receive that particular benefit, and, the longer they’re here, the more the credits can stack up. It does lean toward length of service as part of the formula for receiving pay credits, but right away the minimum credit is 3% of salary.”

Principal also offers multiple distribution arrangements. Retirees may choose from a systematic withdrawal plan or several in-plan options. The latter are insurance-based products, such as annuities, that guarantee income. Nonguaranteed options are an in-plan managed account service and in-plan managed payout funds.

Technology helps participants manage their retirement savings. The Principal Real Start enrollment module, on the participant website and app, guide new employees through key actions such as choosing a deferral rate, making an investment election, designating a beneficiary and securing their account.

One hundred percent of employees have a work email address, and 98% also have a personal email address on file, so Principal leverages email as a communication channel. Coulson says targeted and personalized emails have proven to be an effective method. In the past year, click rates for these employer-generated emails were over 68%.

The recently launched My Total Rewards employee benefits dashboard on Principal’s intranet aggregates compensation and benefits information. “The dashboard for My Total Rewards includes all aspects of an employee’s rewards in a simple, at-a-glance format, including retirement benefits, compensation and incentive pay, health and well-being, and additional offerings specific to the employee,” Coulson says. “It’s unique in that it brings all of our financial and wellness benefits, including retirement benefits, into one place and attaches a dollar value to each. Employees can see the total value of the benefits package, how the offerings fit together and which pieces they may not be maximizing.”

What motivates the extensive benefits? “It’s who we are, and it’s because it’s important to us,” Coulson says. As an organization, we spend time thinking about the financial well-being of others. When that’s in your DNA and that’s what you’re thinking about, then you think about financial well-being for your employees.”

—Ed McCarthy