Aflac Inc., the provider of hospital indemnification and other voluntary insurance products, has said it will double its 401(k) match in light of the tax bill signed by President Trump last week.
The company will increase its match from 50 percent to 100 percent of the first 4 percent employees defer to their retirement plan. It will also make a one-time contribution of $500 to all employees in the plan, as part of what the company says will be a $250 million overall investment by the company over the next three to five years.
“We are pleased that these tax reforms provide Aflac with an opportunity to increase our investments in initiatives that reflect our company values; providing for our employees in the long and short term, ensuring future growth for our company and giving back to the community,” said Aflac CEO Dan Amos, in a statement.
“We will use these funds to help secure healthy retirements, develop employee skills in an evolving global business climate, and provide additional protections for our workers and their families,” he added.
Aflac’s 401(k) Savings and Profit Sharing Plan has about 5,400 active participants and $386 million in plan assets at the end of 2016. The average account balance is $57,000, according to BrightScope, which rates the plan in the top 15 percent of the company’s peer group.
AT&T, Wells Fargo, Boeing, and Comcast are among the companies that have announced bonuses or raised company minimum wages after the tax bill was signed, but Aflac is the only company to date to specifically use the windfall from lower corporate tax rates to improve company retirement plans. The Tax Cuts and Jobs Act cuts the corporate tax rate from 35 percent to 21 percent.
The Columbus, Georgia-based insurer posted $5.5 billion in revenue for the third quarter, and $716 million in net earnings. Its effective tax rate has historically been about 34.5 percent, according to last quarter’s earnings call.
Aflac’s Japanese unit accounted for $3.8 billion of the company’s revenue. The tax bill establishes a new territorial tax system, which exempts U.S. companies’ overseas profits from being taxed here. It also establishes a much more favorable repatriation tax rate of 15.5 percent on cash held overseas that is brought back to the U.S.
The company is on pace to repurchase up to $1.5 billion in company stock by the end of the fiscal year, according to the third quarter earnings report. Critics of the tax reform bill claim companies will invest much of the new profits in stock buy backs, which have the affect of inflating share values.