By almost any standard measurement, Intersil's 401(k) plan is successful. Average balances in the plan are about $170,000. The average employee deferral rate is about 8%. The plan boasts a 94% participation rate. The company implemented auto-enrollment 12 years ago and currently auto-enrolls employees at 6% and offers a dollar-for-dollar match up to 6% after one year's service. Yet the company, which designs and builds semiconductors for a wide range of clients, wasn't satisfied.
"We're looking for other measures beyond the classic deferral measure because we're already there, as far as I'm concerned," says David Roberts, Intersil's benefits manager.
When Roberts joined the company two years ago, he saw an immediate need for deeper retirement plan education, in part because as much as 30% of employees at some locations were either at retirement age or approaching it.
"What I saw was an immediate need for employees to understand that they were indeed ready to retire and, ultimately, provide them with resources to help them understand that from a big picture perspective and, after retirement, what they could expect from an expense perspective," says Roberts. In addition, he wanted a program that would also appeal to younger employees.
Working in partnership with his retirement plan consultant, Jason Chepenik, Roberts implemented a comprehensive program using services from three different vendors. "For our organization, there wasn't one particular company that was going to meet all of our needs," says Roberts. "The three vendors addressed three specific and different needs."
3 vendors, 1 program
Financial Finesse was selected to provide certified financial planner services for all employees. As well, Financial Finesses was hired to oversee the entire project and market it seamlessly to employees. It created the portal where employees can access all the different services.
"Intersil's done a tremendous job in that they had this challenge of combining multiple vendors into a single program," says Liz Davidson, CEO of Financial Finesse. "Having employees understand how to use [the program] and when to go to which piece of it is one of the most impressive things."
Intersil hired Boulevard R for the app portion of the program. Boulevard R's Retiremap product "allows you to understand not only what your income needs are upon retirement, but lets you build in big life events outside of that," says Roberts. "It's an interactive website that fit well with our employees because we're high tech and have a lot of engineers."
Financial Soundings was brought on board for the investment portion of the program. "They send out a retirement readiness report to people, as well as an alternative fund mix they could use to help them achieve their retirement goals," says Roberts. "That was an advice portion that was important for us to have for more savvy investors who want help with that."
Intersil called the program Intersil Wealthy Living to dovetail with its physical wellness program, Intersil Healthy Living. The program launched last summer with an initial financial assessment. Employees were encouraged to complete the financial assessment, using the chance to win an iPad as an incentive. Over a two-month period, 45% of employees took the assessment, exceeding Intersil's goal of 25%. That's a giant number, according to Chepenik, who says the typical online response rate is 3%.
The reason for conducting the assessment was twofold. One, Intersil wanted a way to measure the program's success. And two, it used its ERISA budget to pay for the program.
"[Law firm] Drinker Biddle wrote an opinion letter that you can't get your ERISA budget to pay for a financial wellness program unless you do an assessment that shows there's a need for this information," Chepenik explains. "Do an assessment first; then, you have this proof point that says 'here is employees' anxiety in different areas' and that gives you the path to use the ERISA budget."
Half using program
By the six-month mark, close to half (45%) of employees have used the program. Return usage is also higher than average, says Davidson.
"It's not an easy workforce, because there is that sense they need to feel this information is really high quality; it needs to pass their more analytical tests," she says. "We've also done some workshops for the employees, and we've gotten some really challenging questions, almost like you have to prove it to them. I think [Intersil] chose the right vendors for that in terms of the sophistication of the tools."
Intersil's primary objective in launching the program was preparing employees for retirement. "We don't really compare ourselves against our peers per se - we do in our match and such - but we really wanted to take this plan to the next level," Roberts says. "We want to be a leader and give our employees everything they deserve so they relish this benefit and are engaged in their retirement needs."
This commitment to financial wellness is refreshing for Chepenik, who says while some employers are more willing these days to engage in discussions about financial wellness, others simply don't care.
"What was cool for me as a consultant is this client was searching for something more. They want to be cutting edge," he says. "They have heavy competition for employees, and they don't offer a pension plan like some of their competitors. They wanted something unique enough it would help attract and retain employees."
Davidson agrees. "If you looked at their plan metrics before the program, they were doing very well by any sort of average standard in terms of the health of their 401(k) plan and employee participation, and I think that's because they've been ahead of the curve for awhile and their employee base is quite advanced," she says. "And yet, they were still looking to take it to the next level. That impressed me."
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