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Aon Helps Nationwide with Retirement PREParedness

This is part of a special advertising section highlighting case studies featuring successful strategies in benefits.

Monday, March 1, 2010
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Nationwide started as the Farm Bureau Mutual Automobile Insurance Co. in 1925, with the goal of providing quality auto insurance at low rates for farmers in Ohio. Over the last 80-plus years, Nationwide has grown to be one of the largest insurance and financial services firms in the world.

Nationwide credits its motivated and engaged workforce for its phenomenal growth. The company takes great pride in its associates' dedication and hard work and, in return, offers a comprehensive and competitive total rewards program -- including benefits that associates can use to prepare for a financially successful retirement. Nationwide associates accumulate retirement benefits through a combination of defined-benefit, 401(k) and retiree-healthcare plans.

Aon Consulting and Nationwide partner to provide Nationwide associates the tools and resources to successfully plan for their retirement. With more than 35,000 employees, Nationwide knows retirement preparation is no small task and one that's best accomplished in partnership with its associates.

Nationwide's dedication to retirement preparation for its associates led the company to be recognized as the 2009 Corporate Plan Sponsor of the Year by Plan Sponsor magazine.

"With the downturn in the economy, many companies suspended their 401(k) match, froze their pension plan or terminated retiree-healthcare benefits," says Bob Puccio, senior vice president of associate services at Nationwide. "Nationwide demonstrated its commitment to retirement preparation by extending financial assistance to a greater number of associates to help them pay for retiree-healthcare coverage and enhancing the automatic-enrollment and automatic-increase features in their 401(k) plans." 

In 2006, less than 75 percent of eligible associates participated in Nationwide's 401(k) program. Adopting automatic-enrollment features for all associates allowed Nationwide to exceed its goals -- reaching 95 percent participation. Nationwide conducts 401(k) automatic enrollment and automatic increases annually.

In 2009, Nationwide increased the default enrollment percentage from 3 percent to 4 percent of pay and raised the maximum contribution amount in the automatic increase provisions from 6 percent to 12 percent. Associates not enrolled in the 401(k) were automatically enrolled in the plan at 4 percent of pay, and those contributing less than 11 percent saw their contributions increase by 1 percent of pay -- unless they specifically chose to opt out.

Nationwide's adoption of automatic 401(k) features, with the resulting increase in participation, has raised the cost of the company's matching contribution by approximately $10 million annually.

Nationwide, in partnership with Aon Consulting, also implemented a comprehensive educational-outreach program to complement the company's use of 401(k) automatic-enrollment and automatic-increase features.

Aon Consulting helped Nationwide "bring the program to life" through total rewards statements, which include specific information confirming current benefit accruals and a Personalized Retirement Education & Planning (PREParedness) analysis. The PREParedness tool includes estimates of Social Security and 401(k) benefits, while incorporating benefits under Nationwide's defined-benefit pension plan and anticipating retiree healthcare needs.

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Annually, each associate receives a personalized analysis that confirms whether they are on track for retirement. If not, the Aon Consulting tool identifies a personalized action plan, says Dianna L. Smith, Nationwide's director of retirement benefits.

"Providing the PREParedness tool is not only about increasing participation in benefits like the 401(k), or even sustaining a high level of participation. Nationwide is committed to ensuring associates are effectively preparing for retirement and the tool is just one resource we provide to help our associates do just that." One often overlooked area of retirement preparation is retiree healthcare.

While the PREParedness analysis has always anticipated retiree-healthcare costs, Aon Consulting helped Nationwide take preparing for retirement-healthcare expenses to the next level by developing a tool allowing Nationwide associates to estimate their healthcare costs for retirement. This tool was upgraded and reintroduced to associates in 2009, at the same time the company expanded its financial assistance for retiree healthcare. These types of tools and strategies helps Nationwide associates fashion their own destiny.

HIGHLIGHTS

Organization: Nationwide

Headquarters: Columbus, Ohio 

Primary Business: Nationwide is one of the largest and strongest diversified insurance and financial-services organizations in the United States.

Benefits Challenge: Aon Consulting and Nationwide partnered to provide Nationwide associates the tools and resources needed to successfully plan for their retirement.

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