Changes to Intel Corp.'s 401(k) plan are taking place in the context of the company's use of alternative investments in its $4.9 billion profit-sharing plan, known as the retirement contribution plan, and $648 million defined benefit plan.
The alternatives investments, like all other investments in all of the plans, are contained in a master trust.
Eighty-five percent of the defined benefit plan assets are in domestic and international fixed income. Last year, Intel eliminated equities, replacing them with hedge funds, which now account for 15% of assets.
“It was a diversification strategy,” said Stuart Odell, assistant treasurer, retirement investments.
The DB plan, closed to new employees since Jan. 1, 2011, works as one part of Intel's overall retirement strategy, and has a low correlation with the investments in the retirement contribution plan, he said.
“There are a number of factors that go into the decision around asset allocation of the DB plan, including the funded status and nature of the relationship between the retirement contribution plan and the floor-offset defined benefit plan,” he added.
Within the retirement contribution plan, hedge funds account for 25% of assets, while other alternatives such as commodities and private equity make up 15%. The other main components are domestic and international equity at 40%, and fixed income, 20%.