Plan Profile – Saudi Arabian Oil Company

Consider this post the first in an ongoing series on some of the best and most innovative 401k plans that we have found.  There are many plans that could justifiably be called the top plan in their peer group but there is one plan that has stood out far above the rest: The Savings Plan of the Saudi Arabian Oil Company.

Highlights of the Savings Plan of the Saudi Arabian Oil Company:

Plan Design:

  • Immediate Eligibility: Employees become eligible to participate in the Plan on the first of the month following the employee’s first day on the payroll.
  • Immediate Vesting: Participants are fully vested in Employer and employee contributions and earnings thereon from the initial date of participation.
  • Company Matching Program: The Employer matches 100% of the employee’s contributions up to a maximum of 9% of the employee’s Monthly Benefits Base.
  • Low Fees: The company uses uber-low fee provider Vanguard as its trustee and recordkeeper, and with over $1 billion in assets and nearly $750,000 per participant account it has negotiated rock-bottom fees unlikely to be matched by many other 401k plans.
  • Flexibility: Employees have the option of a company funded retirement plan, a company matched savings plan and a range of insurance plan options, or an annual cash payment equal to 17% – 19% of annual base salary.
  • PPA Features: The company automatically enrolls new employees into the plan at the 9% deferral rate required to take full advantage of the company match.

Plan Performance:

  • Participation Rate: 99.9%.
  • Deferral Rate: The average participant is putting over $40,000 a year into the plan in a combination of pre-tax and after-tax dollars.
  • Account Balances: $710,053 per participant.

Weaknesses:

  • Investment Menu: One of the only “weaknesses” in the plan is the lack of lifecycle options in the investment menu. Luckily, Vanguard offers some of the best, low-cost lifecycle funds in the business and this should be a quick fix.

Overall, this plan is one of the best plans we have seen to date, and its quality was confirmed by the BrightScope Rating calculations:

brightscope-saudi-arabian-oil-company