NASHVILLE, Tenn. - Nortel Networks Corp. executives are trying to keep the company's $3.5 billion 401(k) plan for U.S. employees on the leading edge by making sure the plan has a top-notch set of investment options, along with making the vesting immediate and 100% and revamping a newsletter about the plan.
And more changes are in the works. Nortel Networks executives are planning to move to paperless enrollment sometime in 2001, said Daniel Ray, manager, U.S. benefits. (A Feb. 15 announcement that the company is reducing its work force by 10,000 will not affect plans for the 401(k), said spokesman David Chamberlin.)
Currently, Nortel Network's 401(k) plan is unbundled with MetLife Retirement and Savings Group, New York, as its record keeper, and 17 different investment options, including company stock. Other options are: PIMCO Total Return Fund; Deutsche Asset Management Fund, a balanced fund that has benchmarks of 55% S&P 500, 35% Lehman bond and 10% T-bill; MasterWorks LifePath series of five custom indexes; State Street Global Advisors Russell 1000 Value Index Fund; SSgA S&P 500 Flagship Fund; Pioneer Growth Fund; Deutsche Investment Equity Fund; Delaware International Equities Fund; Templeton Foreign Fund; MAS Small Cap Value Fund; Fixed Income Fund, managed by Deutche; and Baron Asset Fund.
Last year, the Brampton, Ontario-based company changed the U.S. plan's vesting schedule from a four-year one to 100% immediate vesting on the date of hire in order to retain and attract employees, Mr. Ray said. Nortel Networks also made fully vested any current balances of existing employees.
"We made comparisons against similar types of companies," Mr. Ray explained. "We wanted to be on the leading edge of that type of plan change."
Nortel Networks also gave its quarterly newsletter about the 401(k) plan a complete face lift, updating the graphics and making the text more dynamic, said Jeannie Evans, Nortel benefits adviser.
"Our 401(k) plan is an important tool for us in attracting and retaining employees," Ms. Evans said. "We wanted the newsletter to be helpful and relevant beyond what is in the run-of-the-mill newsletter."
For example, an entire recent issue focused on explaining benchmarks and how to use them to track investment option performance. The same issue also discussed a two-for-one stock split that occurred last May and how it could affect the company stock option. (The company match - 6% of pay up to 15% of eligible earnings - is in cash.)
"There was a lot of discussion about broadening and deepening the scope of the newsletters' content to make them relevant to employees," said Ronald D. Hurt, vice president of MetLife Retirement & Savings Group, which provides the newsletter for Nortel.
Employees can find the newsletter both on the company's intranet, with hot links to MetLife's website, and in paper form, Ms. Evans said.
Nortel also uses American Express Retirement Services to provide retirement education seminars and, for a preferred rate fee to users, financial planning, Ms. Evans added.
Right now, participation in the 401(k) plan is around 80%. Company officials also considered automatic enrollment feature, but so far haven't decided to add it, Mr. Ray said.
The company also has a $1.4 billion defined benefit plan for its U.S. employees.