American Express

Among the many design changes American Express has made to its 401(k) plan in recent years, one of the most significant has been the move from a discretionary, profit-sharing contribution to an annual, fixed-rate contribution with tiered benefits.

“Given the broad economic climate, we wanted to ensure we were providing our colleagues with the extra support they may need, especially those in more junior roles,” says Barbara Kontje, director of retirement and smart saving at New York City-based credit behemoth American Express.

Under the new plan design, lower-paid participants who contribute 6% will have that matched 100%, besides receiving a 3% fixed contribution, for a total of 15% going into their retirement account. Many financial advisers cite 10% to 15% of compensation as an annual goal for retirement savings.

That special attention to lower-paid workers is a prime example of what makes the 401(k) plan such a standout, says Craig Morgan, director of retirement at WTW, who works with Amex on the plan. The changes were implemented after the sponsor analyzed data on employee engagement and contribution rates.

“They recognized in the data that there was a gap [in saving rates for lower-paid workers], and they saw the opportunity to address it through a fairly straightforward design change,” Morgan says. “They’re going to continue looking at different cohorts within their population to make sure there aren’t other gaps, going forward.”

Another cohort that American Express has made a priority is part-time employees and offers retirement benefits to workers who put in at least 20 hours per week.

“At Amex, supporting all colleagues’ overall well-being is critical,” Kontje says. “By providing the opportunity to enroll in the 401(k) plan, as well as medical and dental benefits for full- and part-time employees, we are accomplishing that goal.”

Other recent changes to the plan have included switching administrators to one that can provide the “super Roth” feature, by which after-tax contributions are automatically converted into Roth contributions each payroll period. The plan also boosted its automatic enrollment deferral rate from 3% to 6% of total pay. Contributions automatically increase 1% per year up to 10%.

To complement such changes and increase engagement and understanding of the plan, Amex has a “Smart Saving” financial wellness program, which in the U.S. includes access to financial planning; coaching sessions and workshops; retirement webinars; and on-demand access to other financial education resources. U.S. participants also have access to voluntary benefits, including home, auto and pet insurance, as well as tools to track their income and spending habits.

Kontje attributes the plan’s 92% participation rate to automatic enrollment, as well as frequent and timely education focused on awareness building and specific opportunities for participants to engage with the plan.

—Beth Braverman