TOTAL PLAN ASSETS/PARTICIPANTS: $70 million/180
PARTICIPATION RATE: 89.66%
AVERAGE DEFERRAL RATE: 9%
DEFAULT DEFERRAL RATE: None
When you work for WD-40 Company—WD-40 being the trademark name of the oil and water-displacing spray—a word you hear a lot is “tribe.” And while tribe does have an “I,” the company culture is focused on looking out for each other.
A tribe protects its brand, people and community, says Garry Ridge, president and CEO of WD-40 Company, in a video on the manufacturer’s website. So it comes as no surprise that WD-40 Company is dedicated to protecting its workers—not just today but through their retirement.
To encourage participants to save aggressively, the company, with headquarters in San Diego, offers a 50% match, up to 6.6% of employee contributions. With the company’s 10% nondiscretionary annual profit-sharing contribution and 5% discretionary contribution—which has been made consistently in the past—on employee-qualified compensation, the current company contribution equals an impressive 18.3% of qualifying compensation.
“Even through the Great Recession crisis, we continued to contribute the full 15%,” notes Scott Farrell, committee chairman and director of tax treasury risk at the company.
“At the maximum percentages, employees are saving the equivalent of nearly 25% of their salaries and incentive pay,” he says.
Employees at the company are well on their way to a secure retirement as a result. The current participation rate is about 90%, with an average deferral rate of 9% and an average account balance of $333,681. As of last July 31, 66% of WD-40 Company’s employees have been on track to meet the committee’s income replacement goal—Social Security included—of 85%, says Shawna Christiansen, senior retirement consultant at Retirement Benefits Group (RBG), the company’s adviser since 2014.
Some employees—less than 10% of the work force—actually end up exceeding the Section 415 contribution limit of the Internal Revenue Code (IRC), which, for a defined contribution (DC) plan, is $54,000 this year. Farrell says this is obviously a good problem to have, and, to help these employees save even more, the retirement plan committee has been considering a deferred compensation plan, to offer them an additional savings vehicle.
Making the Switch
In Farrell’s opinion, lower fees are one of the greatest sources of pride in WD-40 Company’s DC plan. Over the past six years, the plan’s total operational fees have decreased from 107 to 32 basis points (bps).
Last year, the company chose Empower Retirement as its new recordkeeper, after a vendor analysis determined the switch could provide participants with helpful online tools and lower investment fees, plus allow for fee equalization—the dividing of recordkeeping and advisory fees evenly among participants in a flat fee, Farrell says. “We are very sensitive to fees for our participants. … The impact of reducing fees is huge, over time,” he says.
Further, Empower’s online technology allows employees to put numbers to things beyond just fees—such as monthly retirement income savings instead of presenting just the lump-sum total. In addition, the employee website details the expected annual cost of health care in retirement, which, Juntunen says, was a selling point for choosing Empower as recordkeeper.
In the past few years, WD-40 Company has also made changes to improve its fiduciary process. The company added another committee member to make a team of four.
Moreover, the company adopted an annual “Chart of Work” (COW) approach, to ensure that the committee understands its role and fiduciary duties. The COW helps the company plan its year, maximize productivity at meetings and ensure that important topics such as Section 415 limits will get addressed.
COW was put in place with the help of RBG when the adviser was hired as WD-40 Company’s 3(21) co-fiduciary. The list has helped the company improve fiduciary procedures, from establishing an online fiduciary compliance vault for storing plan documents, to having the committee complete a fiduciary training session with an Employee Retirement Income Security Act (ERISA) attorney.
WD-40 Company also has ramped up its educational offerings. Thanks to the change of recordkeeper and adviser, tribe members now have a host of new educational materials available to them. One such includes a retirement readiness report, which the employer requested from advisory firm Financial Soundings.
Financial Soundings’ technology is customizable, to address the needs of various demographics. As WD-40 Company’s employees are, on average, 48 years old, the program found that many were overexposed to equities and needed to de-risk their accounts, says Larry Deatherage, principal at RBG.
The Financial Soundings retirement readiness report is customized and given to all employees, even those not currently participating in the retirement plan. As a result, more people are motivated to join the plan. In fact, seven more employees have joined since 2015, when the program was implemented, Christiansen says.
The report provides individualized retirement income replacement goals; action steps to help employees track their goals; and a complete retirement picture, including outside assets if the participant chooses to add them.
The company makes individual and group sessions available as well, giving participants a chance to brush up on retirement education. RBG participant engagement specialists meet with about 30% of the employee population each year for one-on-one sessions, Christiansen says.
Additionally, Empower provides targeted campaigns that have also gotten more people signed on. A recent example was an effort to have beneficiaries added to the plan, which resulted in 30 more participants taking that step, Christiansen says.
Another goal is targeting people who save less than 5%, she says. This is done through sending mailers, flyers and, particularly, emails because those can include links for taking action.
“We’re a learning organization,” Farrell says of the evolving retirement offerings and education. “We’re looking out for each other—trying to make each of us better.” —Corie Hengst
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