2019 Plan Sponsor of the Year
Total Retirement Offering

Occidental Petroleum Corporation

FINALIST

Total Plan Assets:  401(k): $2 billion; Retirement Plan: $772 million
Participants: 401(k): 10,424 participants; Retirement Plan: 9,759 participants
Participation Rate: 94%
Average Deferral Rate: 10%
Default Deferral Rate: 5%
Default Fund: Vanguard Target Retirement Trust
Automatic Enrollment: Yes
Automatic Escalation: No
Employer Contribution: 401(k):7% match on eligible contributions; Retirement Plan: 7% on eligible earnings to the Social Security wage base + 12% above wage base

Occidental Petroleum Corp. (Oxy) is an international oil and gas exploration and production company that invests in its employees by providing robust benefit programs for the well-being of both its employees and their families. Madelaine Pfahler, director, benefits planning and communication at Oxy in Houston, says, “We believe that Oxy’s benefit programs represent significant value, in addition to cash compensation, and are designed to provide financial security in meeting our employees’ future financial and retirement goals.”

The company has two qualified defined contribution (DC) plans. Its 401(k) Savings Plan features immediate eligibility and vesting, automatic enrollment at 5%, the flexibility to contribute pre-tax, Roth and/or after-tax, and an employer match up to 7% on eligible contributions. The plan has a 94% participation rate, with an average deferral rate of 10%.

The second plan is the Retirement Plan, which Oxy fully funds, contributing 7% on a participant’s eligible earnings up to the Social Security wage base, plus 12% above it.

Historically, Oxy has invested extensively in its retirement and savings plans for employees to help them achieve income security in retirement. In the last decade, the company enhanced benefits by including the annual bonus in employees’ eligible earnings under the Retirement Plan; increased the company match under the Savings Plan, from 6% to 7%; and shortened the plans’ vesting periods, from five years to immediate vesting in the Savings Plan and from five years to three in the Retirement Plan.

In 2016, the company transitioned from an in-house model to an outsourced model by hiring Voya Financial as its recordkeeper. Says Pfahler, “We moved all of the retirement and savings plans, [the] two qualified [as well as] two nonqualified plans, to Voya so that we were able to provide employees with a more integrated recordkeeping solution.”

“A significant driver of that decision was our desire to enhance our plan with a more flexible and integrated recordkeeping solution as well as a more innovative and engaging participant experience,” says Sharon Heymans, manager, corporate retirement plans, benefits accounting and compliance, with Oxy in Tulsa. “Partnering with Voya allowed us to invest more heavily in employee education and to get access to more vigorous metrics to help us target communications.”

Pfahler concurs. “With the plan analytics, we can more easily monitor plans and use that information to drive more targeted communication,” she says. For example, the sponsor can focus on nonparticipants or those not receiving the full match instead of sending an email to all employees, she says.

Education is also aided by Voya’s app and mobile-friendly website, plus income-planning tools, options for automatic escalation and automatic account rebalancing, she adds.

At the time of the transition, Oxy opted to begin enrolling all new participants in the Savings Plan at 5%. Oxy wanted to ensure that employees received the maximum company match, Pfahler says. “It’s been great to see that our average deferral rate has even increased since our move to Voya. On average, participants are on track to replace over two-thirds of their income in retirement.”

Accompanying the launch with Voya, Oxy presented a series of on-site educational sessions, in numerous locations, as well as webinars. “These focused on the richness of our plans, how they work, and highlighted the new tools and resources that the Voya website and app had to offer,” Pfahler says.

Oxy has continued to make changes to help employees save. Last year, it updated the plans’ investment fund lineups and made them identical (except for the Oxy Stock Fund which is available in the 401(k) plan only); both now include a full suite of indexed and actively managed investment options plus target date funds (TDFs) . Because TDFs were new to employees, Oxy and Voya produced a video showing how they work. The video was released as part of a multi-step communication campaign leading up to the investment lineup changes.

“Because of the success of that video and positive feedback we received, we’re working on another video that we hope to roll out midyear,” says Heymans. “This one highlights the value of our retirement and savings plans.”

With the move to an outsourced recordkeeper, Oxy has been able to more accurately capture employees’ thoughts about their needs and wants regarding their retirement goals. Oxy solicits feedback from participants in one-on-one education meetings, as well as after each call received by the Oxy Retirement Service Center. The survey that followed the calls had a 2018 customer satisfaction rate of 97.7%.

“One thing we’ve learned is that there’s no best way to communicate with employees. Voya has been a great partner in helping us to diversify the ways in which we reach them.” —Judy Faust Hartnett

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