05/19/97 LOGGING ON TO YOUR 401(k)

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LOGGING ON TO YOUR 401(k)

Want to inspire employees to save for retirement? Try going online. Since Compaq Computer Corp. put information on its 401(k) plan onto a pc network in its offices and factories, inquiries and other activities involving the plan are up more than fivefold. More important, the Houston computer maker reversed a four-year decline in its employee participation rate.
The lesson: Employees respond to easier access to information. Familiar technology makes it happen. In just the first 10 months of operation, Compaq's computer kiosks logged 5,000 online visitors. ''We have people accessing it all hours of the day or night,'' says Ron Eller, vice-president of compensation and benefits. Add an aggressive 401(k) marketing campaign, and Compaq lifted the participation rate to 82% of eligible employees, from 78%.
QUICK WORK. The system uses a World Wide Web browser to access enrollment and account information at the Vanguard Group, the plan administrator. Compaq launched the program just as employment was booming--and the 401(k) participation rate was falling. Management wanted to enlist newer, younger workers and lower-paid employees to the plan. Vanguard took Compaq's online idea and built a prototype intranet in less than three months. Then, software was enhanced to match Compaq's benefits programs.
The customized system is running on 30 computer kiosks at Compaq offices around the country. By fall, all 10,300 eligible employees are expected to be able to access the intranet from office or home pcs in addition to the kiosks. The system allows employees to dial in to check balances, take a quiz to determine their risk tolerance, review fund performance, even analyze the impact of changing contributions on the nest egg.
Once security features are completed, employees will be able to change funds or reallocate contributions online. ''We're focusing on putting everything into electronic tools,'' Eller says. For now, reallocations still must go through a telephone-based system that requires each employee to use a personal identification number. ''We want to make sure all pieces are there, tested, and secure'' before permitting online changes, Eller says.
Vanguard is rolling out similar Web-based programs for customers such as M.W. Kellogg Co. and Bellcore Inc. ''I think the online world will be the 800 number of the 21st century,'' says Bill McNabb, Vanguard's senior vice-president for the Institutional Investor Group. Compaq's 401(k) participants got there a few years early.
By Gary McWilliams in Houston

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