Intel Corp., Santa Clara, Calif., has reprogrammed investments in its $5 billion 401(k) plan, cutting the number of options to 21 from 72 to reduce overlap and increase ease of choice.
The investment changes are part of a broad effort to increase participation and better align participant asset allocations with their ages and financial circumstances.
“The primary motivation is to improve outcomes and encourage employees to save enough,” said Stuart Odell, assistant treasurer, retirement investments.
Intel also is one of a small, but growing, number of plan sponsors to re-enroll participants, 50,000 in Intel's case.
Plan officials, who have auto-enrolled new employees since 2007, offered auto enrollment to 5,000 non-participating existing employees for the first time, and 3,000 have enrolled since January. The default is 3% of a participant's salary.
Next year, Intel will begin auto escalation, with an annual increase of 1% up to a maximum 10% of a participant's salary.
The centerpiece of Intel's investment effort is a revised lineup that retains some options for employees with little or moderate comfort in investing, but also offers a greater choice to those who are more active investors.
Company officials eliminated 55 mutual funds and two commingled trusts that had been in a mutual fund window. That window was replaced by a self-directed broker option that offers 4,500 mutual funds and exchange-traded funds.
The cuts were made “to give participants a better experience” and reduce overlap in investment styles, said Tamiko Hutchinson, global retirement program office manager, said“When confronted with a long list (of options), they didn't know where to start.”
For the least experienced investors, Intel retained its custom target-date series. Intel has offered this option through a commingled trust since 2004, although “the glide path and underlying manager lineup have changed since the funds were first introduced,” Mr. Odell said.