SERPLUS Investment Changes: Improved Investment Options and the Nearing Election Window

Those who are eligible to participate in Intel’s non-qualified deferred compensation program (“SERPLUS”) recently received notification that the investment options have changed, and they will soon receive a reminder that the election window will open for 2020 deferrals in early November. These notifications raise three questions:

1. Are the changes improvements?
2. What actions do I need to take?
3. What is the best way to make my deferral elections?

I address these questions below.

Are the changes improvements?

We view the new lineup of mutual fund options available in the SERPLUS account as an improvement. Here is the new fund lineup:

Intel states it made these changes because SERPLUS is an unfunded liability for the company. As that liability continues to grow from contributions and market growth, the size of the plan becomes a risk which is increasingly more complex for Intel to hedge. Switching the investment options to passive funds reduces this complexity for Intel.

For investors, this is a good thing. The new passive fund options are diversified, low-cost, and transparent—All characteristics we value highly in making an investment election.

What actions need to be taken?

Prior to November 8^th, employees with SERPLUS accounts should review the new options and make new investment elections for their existing investments and future contributions. If no changes are made, a default re-investment and future investment election for contribution will be implemented.

As with most choices in life, the default option is rarely the best option. The options you choose should account for your investment objectives and the amount of risk with which you comfortable and able to withstand. Don’t default to the default!

What is the best way to make deferral elections?

To answer this question, we encourage you to understand how your SERPLUS account works and the four factors to consider in making your elections:

1. What to contribute?
2. How much to defer?
3. When to distribute?
4. How to invest?

In our previous post on SERPLUS elections, we provide an overview of SERPLUS and cover these four factors in detail.

For clients of Cordant, we walk through the framework of these four factors each year to help them make their decision. If you are unsure how to evaluate the new options and determine the right investments for your account, ask for help.

The information contained in this post is based on Cordant’s understanding of the Intel SERPLUS plan as of 2019. The Plan is subject to change by Intel. Please see your latest Plan document for the most up to date information.