2013
Retirement
Webinar
Series
Perspectives from Our Clients:
Leading the Way
Brant Suddath
Kevin Hanney
Aaron Strahota
Director of Benefits
The Home Depot
Director, Non-U.S. And Savings Plans
United Technologies
Corporate Finance Manager
Marathon Petroleum
Agenda
Section 1
Section 2
Section 3
Retirement Webinar Series | November 20, 2013
The Home Depot
United Technologies
Marathon Petroleum
2
The Home Depot
Brant Suddath
Director of Benefits
Key Facts and Figures






2012 Sales―$74.8 Billion
Total Square Footage―over 235 Million
Transactions―over 1.3 Billion
The Home Depot is the 5th largest retailer in the world
Fortune 500 ranking―No. 34 in 2013
Fastest growing retailer to reach $70 Billion in sales
4
Our Commitment and Our Challenges
The Home Depot’s Commitment: Helping associates save for a
successful retirement through the FutureBuilder 401(k) plan
Associates spread
across country in
retail stores and
other locations
Getting associates’
attention and having
them take action
Difficult to reach
population (part time,
diverse, on the go)
5
Constructing a Better Retirement
Mobile
access
Address access issues by offering easy-to-obtain, up-to-date
benefits information via mobile devices
Make saving easier
Quick Enrollment™ gets more associates into the plan while
maintaining active (rather than default) participation
Provide help
Provide range of options including BlackRock LifePath TDFs,
online advice, and managed accounts; adding income options
Targeted
communication
Clear messages to associates (a) not saving enough or
(b) making investment mistakes based on their age
Streamline process
Make benefits user-friendly by consolidating websites and
providing a direct access from the web and intranet
Bilingual approach
Recognize diverse audiences by offering English and Spanish
language including convenient web chat
Institutional funds
Enhance value with institutional funds (lower fees/higher returns)
including a diversified set of target date funds
6
Engaging the “Mobile” Workforce with Actionable Advice
7
Targeted Communication Campaigns
Quick Enrollment
Rollover to FutureBuilder
8
Web Portal Focused on Health and Financial Wellness
9
Statements with Financial Education – Beyond the 401(k)
10
Significant Results
68%
Match eligible associates participating in
the 401(k) plan
52%
Associates who use online advice,
managed accounts, or target date funds
70%
Participants saving at or above the
match threshold
5,500+
Number of unique mobile advice users
per month -- and growing!
9,300+
Number of new participants as part of
Quick Enrollment™ campaign
11
United Technologies
Kevin Hanney
Director, Non-U.S. And Savings Plans
UTC Plan Investment Lineup
Lifetime Income Strategy
Target Retirement Funds
Fixed Income
Diversifiers
Emerging
Non-U.S. Equity
U.S. Equity - Small
U.S. Equity
2055 2050 2045 2040 2035 2030 2025 2020 2015 2010 2005
Mix & Monitor℠ Core Passive Options
Stable Value
Fund
Gov./Corp.
Bonds
U.S. Equity
Large Cap
U.S. Equity
Small Cap
UTC Ownership
Non-U.S.
Equity
Emerging
Equity
Common
Stock & ESOP
Mutual Fund Window
Mutual Funds
10,000+ Funds Available
4,000+ no load/transaction fee
250+ Mutual Fund Families
* Approved for launch in 2014,
Fund names to be determined
Real Asset
Fund*
Risk Parity
Fund*
14
The Lifetime Income Strategy
What Is It?
A 21st Century Pension Design
Secure retirement QDIA offered
through a defined contribution plan
Professionally managed investments
Retirement income guaranteed by
insurance contracts
Combines a guaranteed floor income
benefit with upside potential,
liquidity, optional joint life and
beneficiary features
Offers security & certainty in
retirement like traditional pensions
while preserving the freedom &
flexibility participants want today
15
Lifetime Income Strategy
Millions
Balances & participants by age, 10/31/2013
$400.0
$350.0
7,000
Approximately $700M in Assets
Nearly 20,000 participants enrolled
6,000
5,559
$300.0
5,000
5,185
$250.0
4,610
4,000
$200.0
3,827
3,000
$150.0
2,000
$100.0
1,000
$50.0
518
$0.0
30 & Under
31-40
41-50
Market Value
51-60
Over 60
# Participants
16
Participant Communications
17
Financial Wellness
Independent financial guidance for employees
18
Optimizing Compensation
 Improving paycheck allocation
Corporate
Landing Page
Text & Email
Guidance
Mobile
Applications
Personalized
financial
guidance for
each employee
Wellness
Analysis
Web
Application
•
Engages diverse workforce
in their everyday finances
using cutting-edge
behavioral science
•
Helps “find the money”
to save through powerful
budgeting tools and
personalized guidance
•
Connects Total Rewards
programs to personal
finances through timely,
relevant messages
19
Marathon Petroleum
Aaron Strahota
Corporate Finance Manager
Marathon Petroleum at a Glance
 Fortune 50 company established in
1887
 Headquartered in Findlay, Ohio
 Fourth largest U.S. refiner
 $82.5 Bn in 2012 Revenues
 Approximately 28,000 employees
 Approximately 1,470 Speedway
convenience stores
 Approximately 5,100 Marathon Brand
retail outlets
 Extensive terminal and pipeline
network
21
Overview of Retirement Plans
Marathon Petroleum places great value on providing for employee retirement
through both a DB and DC plan
 Open DB Plan (Assets $1.6B)
 Traditional benefit frozen…cash balance plan as replacement
 Tenured workforce
 Preference of lump sums over annuities
 Approximately 95% Funded
 DC Plan (Assets $1.8B)
 Competitive employer match
 90% + participation rate
 Target date funds, Financial Engines and managed accounts
22
Evaluation of Pension De-Risking Strategies
 Funding Options
 Discretionary cash contributions
 Borrow-to-fund (swap pension debt for public debt)
 Liability Management
 Plan design changes (Freeze, Close, Convert)
 Lump sum windows
 Annuity purchase
 Investment Policy
 Hedging asset portfolio
 Dynamic asset allocation
23
Pension De-Risking Journey
 Asset management of Plan was previously focused on total return
 Separation from affiliate in 2011 provided an opportunity to review Company’s
pension risk philosophy
 Aon Hewitt led pension risk analysis to understand situation and provide
potential de-risking options
 Uncorrelated volatility in bond and equity markets, combined with funding
requirements under PPA, creates substantial cash contribution volatility
 Situation has asymmetric risk profile…substantial downside in lower rate and/or
equity market correction with limited upside (trapped surplus) in alternative
scenarios.
 Adopted a dynamic de-risking strategy which systematically reduces risk in
plan by shifting assets to bonds as funding levels improve
 Risk profile of plan will be substantially reduced over time as portfolio increases
allocation to liability-matched bonds
24
De-Risking Pension Required an Overhaul
Reducing risk for Marathon and plan beneficiaries through policy changes
Static Asset
Allocation
Concentration of
Risk on Single
Manager
Total
Delegated
Return
Model
Model
Liquidity
Limitations
No Liability Risk
Management
Dynamic DeRisking Asset
Allocation
Systematic Risk
Reduction
Pension
Advisory
Risk
Model
Model
In-House
Expertise +
Consultants +
Asset Managers
Daily Funded
Status Monitoring
25
Key Learnings
A well thought out governance structure is the key to a successful
de-risking strategy
 Incorporate glide path into investment policy
 Leadership/investment committee buy-in to plan on the front end
 Monitor funded status daily…and execute triggers as they occur
 Take advantage of the opportunities the market gives you…when they give it to you
 Aon Hewitt daily monitoring analysis shows significant benefit
 Acting with diligence avoids the paralysis that comes with setting up meetings and
the obligatory follow-ups that result
26
Funded Status Monitoring Dashboard
27
Questions and Answers
Contact Us
Retirement@aonhewitt.com
Retirement Webinar Series | November 20, 2013
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About Aon Hewitt
Aon Hewitt empowers organizations and individuals to secure a better future through
innovative talent, retirement and health solutions. We advise, design and execute a wide
range of solutions that enable clients to cultivate talent to drive organizational and personal
performance and growth, navigate retirement risk while providing new levels of financial
security, and redefine health solutions for greater choice, affordability and wellness. Aon
Hewitt is the global leader in human resource solutions, with over 30,000 professionals in
90 countries serving more than 20,000 clients worldwide. For more information on Aon
Hewitt, please visit www.aonhewitt.com.
© 2013 Aon plc
This document is intended for general information purposes only and should not be construed as advice or opinions on
any specific facts or circumstances. The comments in this summary are based upon Aon Hewitt's preliminary analysis of
publicly available information. The content of this document is made available on an “as is” basis, without warranty of any
kind. Aon Hewitt disclaims any legal liability to any person or organization for loss or damage caused by or resulting from
any reliance placed on that content. Aon Hewitt reserves all rights to the content of this document.
Retirement Webinar Series | November 20, 2013
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