Savings InSight, the new feature in Buck Consultants' $150.7 million $401(k) plan, is “being insightful as well as providing insight to the future,” said Jeannie Lowe, San Francisco-based administrator of the 401(k) plan and Innovator Award winner.
The program offers a customized analysis of an individual's retirement needs, creates a retirement target and prepares a contribution strategy, said Ms. Lowe, who also holds the title of vice president, human resources business partner.
Savings InSight recommends savings levels based on the employee's pay, age and account balance, as well as outside savings and Social Security. Individuals can change the rate on their own.
Savings InSight was developed because “employees have to get more involved in planning for their retirement,” Ms. Lowe said. “Even people who are knowledgeable don't always get involved. They can get distracted by day-to-day things.”
It took about a year — starting in January 2013 — for Buck Consultants to create and develop the program. Buck's 401(k) plan and the defined contribution plan of Gates Corp., Denver, were the first customers for Savings InSight, which is being sold to other plan sponsors.
Theodore Goldman, Washington-based managing director and Buck's national retirement leader, described Savings InSight as a combination of “big data, behavioral economics, actuarial science and automation.”
The program keeps the participant on track by updating calculations either at the participant's request or automatically once a year. It also contains a draw-down component, sending a monthly check to a retiree instead of a lump-sum distribution. There isn't an annuity component.
At the Buck 401(k) plan, the program was launched in late April. So far, 90% of Buck's employees have reviewed Savings InSight. Of that group, 22% changed their savings rate, Ms. Lowe said.
The program was presented to Buck participants on an opt-in basis “in order to accelerate the implementation time,” Mr. Goldman added. “We plan to change this to an opt-out approach in the future.”
Success will be measured by the increase in participants' savings and how well participants reach retirement goals.
“The idea of auto-escalating at the individual participant level is definitely unique, and also a very interesting concept,” one Innovator Award judge said.
“This takes auto-enrollment and auto-escalation to the next level — personalized to the employee,” another judge said. “It's very easy for the participant to understand.” n
