Corporate 401(k) >$100MM - $250MM
Searles Valley Minerals
TOTAL PLAN ASSETS/PARTICIPANTS: $104.1 million/755
PARTICIPATION RATE: 92.6%
AVERAGE DEFERRAL RATE: 9.2%
DEFAULT DEFERRAL RATE: 4%
EMPLOYER CONTRIBUTION: 50% match on the first 4%, plus 4% employer nonelective
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, using automatic enrollment at 4%, a company match of 50% of 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 opt-out rate has obviously been small.
“Isn’t that 79.5% replacement ratio awesome?” observes Denise Thomas, Searles benefits manager. “The company is paternalistic, very interested in taking care of [its] 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 are each higher than the national average, particularly for a mining company, says Vince Morris, president of the company’s retirement plan advisory partner, Bukaty Companies Financial Services.
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. “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.”
Searles’ company’s recordkeeper, Empower, 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.
Through Empower, Searles offers participants financial education and managed accounts from Financial Engines. In addition, participants near retirement can elect to work with that company on a drawdown strategy at no additional cost, she says.
A particular concern to her was participants’ loan-taking—half of the employees have an outstanding loan, she says. “People started using their retirement plan like a savings account.” Searles decided to restrict loans to only the employee’s contributions, meaning employees can no longer take a loan against the company’s contributions or match, Thomas says. This dedication to finding a proper solution exemplifies the continual work-in-progress attitude Searles has about improving its retirement plan.
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