TOTAL PLAN ASSETS/PARTICIPANTS:  $208 million/1,090 in 401(k); $201 million/1,070 in ESOP
PARTICIPATION RATE:  88.7%
AVERAGE DEFERRAL RATE:  9.74%
DEFAULT DEFERRAL RATE:  3%
DEFAULT INVESTMENT:  Vanguard Target Retirement Funds
AUTOMATIC ENROLLMENT:  Yes
AUTOMATIC ESCALATION:  Optional
EMPLOYER CONTRIBUTION:  3%; discretionary contribution; variable ESOP contribution and dividends

Participants in RLI Corp.’s 401(k) plan have an average balance of about $180,000—40% above the average participant balance among midsize insurers, the company says, citing benchmarking data from the 2016 PLANSPONSOR Defined Contribution (DC) Survey. Participants defer an average of 9.74%, 2 percentage points above the peer benchmark.

The property and casualty insurance company, headquartered in Peoria, Illinois, does not target percentage goals for employees’ pre-retirement replacement income. “RLI doesn’t have a specific benchmark for how much employees should have in savings when they retire, as we realize everyone has different retirement needs and goals,” says Katie Kappes, vice president, human resources (HR). “We want to provide a benefit that allows employees to achieve their personal retirement goals. We are confident that our plan design and our total employer contributions, which have averaged more than 14% for the past five years, allow employees to do that.”

Employees at RLI have access to both a 401(k) and an employee stock ownership plan (ESOP), and the two play complimentary roles in the company’s work force management. “A cornerstone of our culture is an ownership mentality, built with the company ESOP,” Kappes says. “Every employee acts like an owner, because every employee is an owner.”
The 401(k) plays an increasingly important role as more young employees join the company. “We have found that even our employees newer to the work force realize the importance and impact of saving in the 401(k),” Kappes says. “More than 91% of our employees ages 34 and younger make elective deferrals in the 401(k), with an average deferral of 7%.”

The plan automatically enrolls new employees at 3%, but its nearly 10% average deferral overall indicates longer-serving employees often save at a significantly higher level. “Tenure certainly seems to be a factor in why our average deferral percentage exceeds the benchmark,” says Amy Braet, assistant vice president, compensation and benefits. “Nearly 33% of our participants have been in the 401(k) since 2004, with over one-third of those participants deferring 10% or more.”  

Based on employees’ ages, the company expects one-third of its work force to retire in the next five to 10 years. For the past three years, RLI has worked with recordkeeper Principal Financial Group to do a targeted education campaign for those 55 and older. These pre-retirees get electronic quarterly newsletters as well as reminders of monthly Principal webinars on relevant topics such as Social Security. Principal also offers one-on-one meetings for pre-retiree employees. Since 2016, the average deferral rate for these workers has inched up from 9.4% to 10.2%.

In 2016, RLI also changed the ESOP’s investment-diversification rights, increasing the percentage of company stock that may be diversified. “The more years of participation and the greater a participant’s age, the greater percentage of company stock in the ESOP he can now diversify,” Braet says. “We wanted to ensure that employees’ overall company retirement benefit was not so heavily weighted in RLI shares, while recognizing that ownership is an important element of RLI’s culture. We feel this pride of ownership makes a difference and has led to our success— and will continue to do so in the future.” —Judy Ward

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