Exelon Corp. has overhauled the design and investments of its $6.2 billion 401(k) plan, seeking to provide greater diversification and simplicity while reducing costs.
Among the changes, officials at the Chicago-based electric utility created three actively managed multimanager funds and a series of custom target-date funds that use Exelon's defined benefit plan managers. They also sharply reduced the total number of investment options.
The changes were made in conjunction with merging the Chicago-based Exelon's plan with the plan of Constellation Energy, acquired by Exelon in March 2012. The overhauled plan was launched in July. Assets from the old Exelon plan account for about 80% of assets in the merged plan.
The Constellation Energy acquisition “was a great opportunity to combine the plans and get greater leverage and scale and really to start over,” said Douglas Brown, senior vice president and chief investment officer of Exelon. “Both were good plans.”
Behind the broad restructuring was the desire to be “more user-friendly” as well as to increase diversification and cut costs, Mr. Brown said. All of this was done without the help of investment consultants because, he added, Exelon felt confident about handling the changes internally.
Mr. Brown said his team began working on the investment menu and plan design changes in late 2012, completing the work at the end of 2013.