LLOG Exploration Company, L.L.C.

At LLOG Exploration Company, LLC, an average deferral rate of 11.6%, plus an employer match of 100% on 8%, go a long way to explain the current average 401(k) participant balance of $300,000.

Eighty-five percent of participants actually contribute 15% or more, and with the 8% match, that means they get a total contribution of 23% or more each year to their 401(k). Another 7% of participants contribute between 10% and 15% annually.

The Covington, Louisiana-based company focuses on deep-water oil exploration in the Gulf of Mexico. Its employees average about 47 years old, and most have been with LLOG Exploration for at least 15 years. “It is extremely competitive for talent in our industry—not only to hire employees, but to retain employees,” Chief Administrative Officer Kem Ducote says. Because of the specialized knowledge base needed in deep-water oil exploration, employees “are well paid for their experience,” she adds.

LLOG Exploration has offered a dollar-for-dollar match up to 8% of pay “from day one” of the 401(k) plan, Ducote says. The match has proven a strong employee motivator. “With an 8% match, if they put in 8%, their money is doubling immediately,” she says. “That’s a very big inducement to saving.”

The plan does not automatically enroll new employees, but with a 94.9% participation rate, most have chosen to join the plan. “Quite honestly, we don’t have to do a lot of convincing,” Anne Connell, the company’s human resources administrator, says. “Once we tell them that we have a 100% match up to 8% and immediate vesting, they’re like, ‘Where’s the paperwork?’”

Offering a high match makes business sense for LLOG Exploration because it also helps with long-term employee retention, Connell says. “We want them to stay here as long as they can work,” she says. “We value them while they are at the company, and we value them once they leave here and retire.”

LLOG Exploration relies on tools from its recordkeeper, Fidelity Investments, to give participants a clear picture of their retirement readiness. The plan’s UBS Financial Services advisory team also meets onsite with participants quarterly and talks with them by phone throughout the year.

Another reason for the high average balance: The plan has never allowed loans or hardship withdrawals. How does LLOG Exploration explain that to employees? “We talk to them about the commitment that we have to their retirement years, and the importance of leaving the money in the plan to continue compounding throughout their career,” Ducote says. “And we talk about how planning for their future is the best course of action for them throughout their employment.”

When its employees plan for their retirement, LLOG Exploration thinks they need to aim for a 100% income-replacement ratio, Ducote says. “We don’t believe that your spending needs change a lot in retirement,” she explains. “So we try to educate employees to plan on spending the same amount of money as they do during their career. We encourage them to go for a 1:1 income-replacement ratio—and in a lot of cases, our retiring employees achieve that.”

—Judy Ward