Successfully Integrating a Roth 401(k)

Multi-format communications resonate with SAS employees.

SAS, the leader in business intelligence software and services, with 31 years of experience and 43,000 customer sites worldwide, is also a leader when it comes to participant education and communication about its defined contribution plan benefits. After successfully adding a 401(k) feature in May 2002, SAS recently opted to add a Roth 401(k) feature for its participants. Adding progressive retirement savings options fits in perfectly with SAS’ employee-focused philosophy: “If you treat employees as if they make a difference to the company, they will make a difference to the company.”

Implementing the Roth 401(k)
SAS announced the Roth 401(k) feature in December 2006. This allowed employees to plan their 2007 contributions accordingly. The company followed up in late January 2007 with print materials announcing the addition. SAS used both a Fidelity Roth brochure and a SAS Roth FAQ guide. Employees also received an e-mail link to a Fidelity nine-minute Roth tutorial. Ninety days after the Roth 401(k) was introduced to SAS’ plan, the enrollment rate was 3.5 percent. SAS expects the number to grow as Roth 401(k)s become more accepted in the workplace. Employee response has been terrific — one employee said, “This is a wonderful new option. My grandmother is now 9185 and still in her own home. If I come anywhere close to her life expectancy, I’ll need those retirement funds.”

The successful implementation of the Roth 401(k) to SAS’ plan is just one example of excellence in employee communication. SAS has used various methods of employee communication in the past that have helped promote awareness about the company’s plan along with plan changes and updates. One form of communication SAS uses are print communications to employees’ home and/or office addresses. These communications include the Fidelity Annual Checkup, which has been sent to all employees annually since 2004. This checkup offers personal retirement savings scenarios based on the employee’s current salary and date of birth. It includes information on increasing contributions, adjusting asset allocation, and retiring later.

SAS sends a customized New Hire booklet to all new employees, providing specifics about SAS’ plan and giving hypothetical savings examples, asset allocation strategy information, the benefits of saving for retirement, and a rollover form. SAS employees also receive an e-mail on or near their eligibility date to remind them to enroll.

In addition to print communication, SAS also contacts its employees electronically. Employees receive e-mails from SAS about the company plan. These e-mails have included a Flash e-mail with an interactive video prepared by Fidelity. Additionally, online workshops are available for employees. One workshop, titled, “Getting Started in Your Retirement Savings Plan,” is 30 minutes long and contains general retirement savings information, as well as information that is specific to SAS’ plan.

Multi-tiered Approach
Lifecycle funds have been the default fund since SAS outsourced the plan administration and investments in 2000. In 2005, SAS introduced a tiered investment structure to its plan participants. SAS moved to a tiered approach so that plan participants could easily identify the differences in the plan funds. Index funds were introduced due to specific employee requests.

Tier 1 Target Maturity Lifecycle Funds (the default fund)

Tier 2 Passive (Index) Funds

Tier 3 Active Funds

An online workshop was available to inform plan participants about the new tiered investment approach and how it would impact their retirement savings. Also, to communicate the new investment approach, SAS created a customized brochure and set up a booth in the cafE9 at lunchtime where employees could stop by and learn about the new tiered investment structure.

SAS also communicates with employees through on-site workshops and training. These on-site seminars cover topics ranging from personal finance planning, investing basics, advanced investment strategies, investment performance monitoring, and getting ready for retirement. Some of these workshops are also turned into Web casts so employees at regional office sites can participate. Also, SAS employees have access to a Fidelity Investor Center to consult one-on-one with an investment professional.

The exceptional employee communications at SAS also extend beyond retirement planning and into other aspects of employee life and planning. SAS has a Work/Life Department that offers many workshops and resources for employees and their dependents to foster and encourage the integration of the company’s business objectives with employees’ personal needs. These include resources ranging from adoption issues to caring for elderly parents.

SAS has also experimented with an innovative idea: Retirement Clubs. There are three separate groups: Under 35, 35–50, and 50-and-older. Speakers are brought in for lunchtime seminars to discuss various retirement issues, from financial to lifestyle, that affect the different age groups.

Conclusion
The SAS plan is an example of how continuous, multi-format employee communication can be a great success. From providing general information about retirement plans to communicating large plan changes specific to SAS — such as investment restructuring and Roth 401(k) — these communications help employees stay informed and on track for their retirement goals. Print and interactive materials, as well as on-site events where employees can meet in-person with benefits staff help encourage employees to maintain an active role in their retirement planning.