Some good news about a couple of large corporate 401k plans in recent days, as ExxonMobil plans to restart employer contributions and American Express will double the automatic enrollment percentage in its plan.
Reuters reported July 2 that ExxonMobil Corp. will restart contributions to its employee retirement plan on Oct. 1, 2021, exactly one year after suspending the match Oct. 1, 2020 as part of broad cost-cutting measures due to the economic environment at the time.
CEO Darren Woods had previously told employees that the company planned to restore the matching contribution to its U.S. ExxonMobil Savings Plan sometime this year back to the 6% on an employee contribution of 7% or higher.
The company’s financial outlook has brightened considerably, with profits recovering on higher oil and gas prices and improved chemicals margins. Reuters notes that U.S. oil prices rose 24% in the second quarter and natural gas jumped 38% over the three-month period.
ExxonMobil could post a second-quarter profit of $4.08 billion, or 98 cents a share, according to estimates from IBES Refinitiv. It lost $1.1 billion, or 26 cents a share, in the same period last year.
The matching contribution suspension angered white-collar employees who also suffered pay freezes, Reuters reported, and triggered an unfair labor practice complaint by union workers.
Earlier this year, the ExxonMobil board of directors was shaken up in dramatic fashion by a small activist hedge fund, which rode investor dissatisfaction over its 2020 results and a perceived lack of progress in fighting climate change to an unlikely election of three of its four candidates to the board of directors (with the help of proxy votes from BlackRock and other retirement-minded investors). The new board is due to meet this month.
The ExxonMobil Savings Plan has a BrightScope Rating of 88, placing it in the top 15% of all plans in its peer group. This plan is also in the top 15% of plans for Account Balances, Company Generosity, Salary Deferral, and Total Plan Cost. The plan currently has over 44,300 active participants with an average account balance of $450,000 and over $19.4 billion in plan assets.
AMEX doubles down on auto-enrollment
In a recent 11-K filing with the SEC first reported by Pensions & Investments, American Express Co. revealed it is increasing the amount of automatic enrollment for participants in its 401k plan to a before-tax contribution of 6% of total pay, effective Jan. 1, 2022.
Currently, eligible employees are automatically enrolled to make before-tax contributions of 3% of total pay. The company will continue its current policy of an automatic escalation rate of 1% each year until the employee contribution hits 10% of pay.
The company’s matching contribution will remain 100% of a participant’s before-tax contributions of up to 6% of total pay, the 11-K filing said.
The plan’s current recordkeeper is Principal Financial Group, which replaced Wells Fargo in May. Principal purchased Wells Fargo’s recordkeeping business in 2019.
The American Express Retirement Savings Plan has a BrightScope Rating of 85, placing it in the top 15% of plans in its peer group for Account Balances, Company Generosity, Salary Deferral, and Total Plan Cost. The plan currently has over 35,700 active participants with an average account balance of $180,000 and, according to the new 11-K filing, had over $7.1 billion in assets as of Dec. 31, 2020.
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