Chevron Replaces Vanguard ESIP
Fidelity Investments Tapped as New Recordkeeper
Chevron Corporation (NYSE: CVX) announced this week that it will make a major change to a key component of its employee’s retirement savings plan.
In an email released on September 21, the Human Resources Department said, “after conducting an extensive review of leading vendors who provide recordkeeping services for plans similar to the ESIP, we are pleased to announce that Fidelity Investments will become the new recordkeeper of the ESIP and executive plans” replacing a long-term relationship 1015with The Vanguard Group.
The planned conversion date will be January 1, 2018.
Changes are Common
It may seem like Chevron has been using the Vanguard Group forever. But Chevron has changed recordkeepers before. For those of you who were with the company in the 1990’s, you might remember when the plan was called the Profit Sharing/Savings Plan, or PSSP, as it was often referred to.
Companies, always looking for new ways to control costs and reduce expenses, routinely evaluate the costs associated with maintaining its retirement plans. During its most recent review, it’s likely that the services offered by Fidelity Investments were less expensive than The Vanguard Group, prompting the move.
Fidelity Investments: A Powerhouse in Recordkeeping Services
Chevron Corporation is likely benefiting from the pricing provided by Fidelity due to its large-scale operation. Fidelity Investments is ranked as a leader in providing plan services, managing over $1.3 Trillion of retirement assets and exceeding its #2 competitor by over $1.1 Trillion. 1,2
While details have not yet been released from the company, many of Fidelity Investment plans utilize its popular NetBenefits website for account monitoring – and many find Fidelity’s website comparable, if not better than, Vanguard’s online offering.
Few Immediate Changes
The company does not admit to any immediate changes to the ESIP plan because of the conversion. Your investments, including Chevron stock and Vanguard mutual funds should map directly to the new recordkeeper.
However, I would expect the company to introduce additional investments on the platform, most likely those packaged and sponsored by Fidelity. But for now, your investment choices should remain the same.
Other features that are staying the same include employee contribution options, company matching contributions, vesting schedule, and distribution options.
Changes are coming in the way that plan loans are handled. Generally, you will only be able to have 2 outstanding loans at any time. Further, there will be a 30-day waiting period between paying off one loan and applying for another.
Pension Financial Group and Fidelity Investments
Pension Financial Group already has a relationship with Fidelity Investments that spans decades. In fact, some of our retirement portfolios already utilize several Fidelity Advisor Mutual Funds. So, when it’s time to make a retirement decision, we can help take the mystery out of your options by pointing you in the right direction.
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Our firm has assisted over 600 of your Chevron friends and colleagues retire from the company. If you would like to learn more about how we can help you prepare for retirement, please call me at (800) 236-9549, visit our Chevron Retiree's website at www.PetroPensions.com, or email me today. Our meetings are objective and confidential.
1 - http://fortune.com/2017/08/22/chevron-ceo-john-watson-expected-to-step-down/
2 - https://www.cnbc.com/2017/08/22/chevron-ceo-john-watson-to-step-down-report.html
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