Kinder Morgan, Inc.

Between employee 401(k) contributions and employer cash balance and 401(k) contributions, Kinder Morgan workers save more than 17% annually, on average, for retirement.

In late 2017, energy-infrastructure company Kinder Morgan, Inc., in Houston, started a review of its retirement benefits. “Our organization started looking at best-in-class practices, and what other employers were doing, to make sure we were offering employees the tools they need,” says Chris Noonan, director, benefits, with the company. “We wanted to understand, were we doing some things the way we were doing them just because we’d always done them that way?”

This review has led to changes in the 401(k) plan’s automatic enrollment features, to help boost employees’ retirement readiness: Starting this year, the default deferral rate doubled from 3% to 6%, and the automatic escalation ceiling rose from 8% to 12%. “When we looked at the behavior of our employees who’d been auto-enrolled, not many of them had opted out,” Noonan says. “And these changes will get them to a point where they’re able to retire more easily, at an earlier age.”

Kinder Morgan reviewed alternative employer contribution methods for the 401(k) but has opted to stay with its 5% nondiscretionary contribution. “Moving to a different employer contribution method would put a higher responsibility on participants to grow their retirement savings,” says Vice President, Benefits, Mark Smith. “Kinder Morgan is taking steps to make sure we’re doing the right thing to help our employees be ready for retirement.”

The company aims for the 401(k) and cash balance plan together to help employees accumulate enough for that time. “If we get them started at 6% in the 401(k) and get them up to 12% [over the next six years], and the company puts in 5%, that’s 17% they’re saving,” Noonan says. “Kinder Morgan puts in another 4% to 5% in the defined benefit plan, as well.”

The cash balance plan has a 4% to 5% employer contribution, based on the total of an employee’s age and years of service. If an employee’s two numbers total less than 50, he gets a 4% contribution. A total of 50 or more gets him a 5% contribution. “When that’s combined with the 401(k), we feel like that gets employees where they need to be,” Noonan says. As Kinder Morgan did its analysis of retirement benefits, it did not consider moving away from the cash balance plan, he adds.

The company’s choice to maintain two retirement plans comes back to preparing the employees to retire, Smith says. “By providing both a defined benefit [DB] and defined contribution [DC] plan, we feel employees are provided the tools to retire when they’re ready, instead of continuing to work because they aren’t financially prepared,” he says. “We’d like to be able to provide a benefit that allows people to retire and enjoy their retirement, not retire and have to start a second career.”

To help employees better understand their retirement-income outlook, Kinder Morgan has introduced a new participant site for the cash balance plan. The site has additional functionality, including a personalized dashboard displaying the participant’s accrued cash balance benefit, and the means to initiate benefits on the site vs. having to call in.

Kinder Morgan also shifted to displaying an employee’s cash balance benefit amount alongside the projected 401(k) benefit on the participant site for the 401(k) plan. “That makes it so much easier for our employees to see all their retirement benefits together,” Noonan notes. “Historically, what we heard from some employees as they exited our organization was, ‘I didn’t even know that I had a cash balance benefit.’ So we really wanted to find ways to get that in front of employees.”