Defined Contributions Insights MagazineJuly/August 2008
The UPS Integrated Retirement Benefits Strategy
Company empowers employees to take charge of their retirement savings.
By Mary Ann Tweddle
In 1907, more than six years before the United States Parcel Post system was established, 19-year-old James E. Casey borrowed $100 from a friend to start a private messenger and delivery service in Seattle, Washington. Since then, the American Messenger Company has transformed itself into UPS — the world’s largest package delivery company and a leading global provider of specialized transportation and logistics services.
Through ten decades of growth and innovation, UPS has continued to evolve, applying new technologies, entering new markets, and adding new services. With each transformation, the company has continued to hold fast to its fundamental principle of service excellence.
UPS has applied the same principles to employee benefits, striking a balance between tradition and innovation and service and value. Today, we continue to support our employees as they plan and prepare for financial security in retirement.
Plan Design Milestones
Some Plan design innovations, developed and delivered in partnership with CitiStreet*, include:
2008 Automatic enrollment for new hires, rehires, transfers implemented; fewer than 5% of new hires have opted out
2007 Roth 401(k) contributions added
2006 Summary Plan Document republished; distributed in messaging to educate and engage; also available in CD format
2003 PINless enrollment for new hires, helping to remove the barriers to enrollment and encourage active saving from first day of employment
2002 Enhanced fee transparency communications for participants implemented; publishing investment management fees, custody fees and recordkeeping fees, originally on an annual basis, now quarterly
2000 Personalized education kit materials implemented
1999 Diversification message in employee communication and education
materials emphasized
1998 Savings Advantage Web site launched
1998 Company match introduced
1996 Hardship loans allowed
1995 Tiered investment approach with Bright Horizon target-date funds launched; originally in 10-year increments, currently in 5-year increments
*CitiStreet is a registered service mark of Citigroup Inc.
Helping Employees Plan for Retirement
In 1988, we launched the UPS Savings Plan as a complement to the existing UPS defined benefit plan. The Savings Advantage program now comprises both the UPS Savings Plan and the UPS Qualified Stock Ownership Plan. The program is designed to give employees the tools and resources to set retirement savings goals and enable them to invest for their futures.
The program’s core message to employees is empowering — Your Future Revolves Around You. From the beginning, we have continually worked to create that empowerment. Some of our innovations have expanded the retirement savings options available to employees; others have helped employees better understand the options available to them; others have provided opportunities to make decisions and selections more easily. All have grown out of our commitment to serving our fellow employees by helping to give them the tools they need to succeed at planning for financial security in retirement.
The Measure of Success
Our efforts to give the best possible retirement savings tools to the greatest number of employees are showing strong, positive results. At year-end 1989, a scant 18 months after the launch of the program, the Plan had 8,300 participants and assets of approximately $19 million. At year-end 2007, more than 62,000 employees were actively participating, and Plan assets had climbed to more than $4.23 billion. Participation and contribution rates more than keep pace with the continued growth in our workforce.
The UPS Savings Advantage Team
All of us on the UPS Savings Advantage team are proud of this success story. Some of us have been part of the team since inception, and most of us have many years tenure. Each and every team member is committed to empowering the UPS workforce.
CitiStreet, our service provider since Plan inception, has proven a true partner in providing recordkeeping, administration, and communication services to the UPS Savings Advantage program. We are nearing our 20th anniversary of our service relationship. We continue to work together to serve UPS employees and participants, sharing a strong mutual work ethic and placing a paramount value on excellence.
We would also like to recognize the work of The Profit Sharing/401k Council of America (PSCA). PSCA offers our team an industry perspective on best practices and helps us sustain our forward-looking orientation for our employees.
UPS Savings Advantage Participants Speak Up
Has participation in the UPS Savings Advantage helped you plan for retirement?
The program is an important part of my retirement planning. As an active participant in my own future, it’s given me an easy way to set aside money, which I intend to use as my primary source of income during retirement.
When you need information or want to resolve a question relating to the UPS Savings Advantage, can you find the right resources?
The Web site is the first place I look to for finding answers to all of my questions about the Plans. It’s very easy to navigate through, from checking my balance, printing a statement, making changes or checking on previous or pending transactions. And anyone who doesn’t have access to the Internet can get what he or she needs from the toll-free Information Line.
Does the UPS Savings Advantage provide you with the information you need to make informed decisions about saving for retirement with the Plans?
The program provides different types of investment options so the choices provide diversification. Information about the funds is presented in a way that’s very easy to understand. I particularly like the Fund Fact Sheets.
Any other comments on the UPS Savings Advantage?
The UPS Savings Advantage is a smart way to save for retirement. The program is extremely flexible to meet your personal needs and the tools and resources available to UPSers are great. I can’t understand why every UPSer doesn’t participate.
Looking Ahead
In order to help our employees prepare for the future, we have to focus on the future. We have recently implemented automatic enrollment for new employees, and have witnessed a majority of our new hires actively enrolling instead of going through auto-enrollment. For those who go through the auto-enrollment process, fewer than 5 percent are opting out and deciding not to save in the program. In the coming years, we will continue to focus efforts on non-participants, communicating with them through a targeted communication campaign to continue to encourage active enrollment. In addition, for existing participants, we will continue to evaluate the program design and make decisions related to new tools and features, providing education and support to our employees in all phases of their careers.
Service, Value and Innovation
We keep our message to employees, Your Future Revolves Around You, at the center of our integrated retirement strategy. Through the UPS Savings Advantage we deliver service, preserve value and evolve through innovation in order to help enable financial security in retirement for our participants.
Mary Ann Tweddle is the UPS Corporate Retirement & Financial Portfolio Manager