Computers show how a little kitty now will grow as you go

Holding employee meetings is one way. Handing out memos and brochures is another. But these are not always the most effective ways a company can get its workers involved in saving for their own retirement. Even with a tax deferral on money put into a 401(k) or 403(b) salary reduction plan and even with employers matching part of those contributions, many workers -- especially younger ones -- don't sign up for these plans. Understandably for many of them, there are other, more pressing matters, like clothes for the family, school and college expenses, and an occasional vacation.

But if someone could see exactly what a small bite out of each paycheck would add up to at retirement -- even if that event was more than 30 years off -- it might provide the incentive to sign up.

A few companies have begun such programs. With some, employees and their families can sit at a computer terminal or something like an automatic teller machine, get an updated accounting of their retirement portfolio, and add in other information like personal savings and investments, various inflation and interest rate possibilities, and possible nonretirement uses for the money, like borrowing some of the funds for college tuition.

After all these ingredients are factored in, the computer can tell the employee how much money he or she should have at retirement, and how long he can expect that money to last at various rates of withdrawal.

One such program is available to employees of NCR Corporation, based in Dayton, Ohio. So far, its computer program is available only to NCR employees. A similar program, developed by the Metropolitan Life Insurance Company of New York, is also being marketed to other companies.

Another interactive computer system -- where an individual can ``talk'' to the computer and get answers to specific questions -- is available to employees at RCA Corporation.

NCR's system was introduced in April of last year, says Douglas M. Bartlett, director of employee relations for NCR's US workers.

``The program was introduced in conjunction with a new thrift savings plan and a new profit-sharing plan,'' Mr. Bartlett recalled. Before, NCR used a traditional ``defined benefit'' pension plan, through which a worker made no contributuions, leaving the company to provide the full pension.

This was changed to a ``defined contribution'' plan that combined a pension and a 401(k). When this change was first explained to workers at company meetings, Bartlett said, ``an employee would stand up and say, `What about such and such? How does this apply to me?' We couldn't answer them right there, so someone would have to go and figure it out.

``We decided to create a program that would allow anyone to generate a scenario on the spot and make it so it could be called up on a screen in the meeting.''

From there, he said, it was not a big step to make the program available to all employees so they could create their own scenarios. Called EstiMATE, the software package is contained on a floppy disk that can be used on an NCR computer. The employee adds his or her salary, age, size of family, and various savings rates. He can also include income expected from social security, the company pension, and his own savings and investments.

The computer will then calculate the long-range effect of a number of variables, including a higher savings rate, annual rates of salary growth, the company's matching contribution, and various rates of return on the investments.

The employee's total retirement fund, retirement income, and percentage of income from each program is then calculated.

While the program was designed by NCR, a company heavily involved in computers, and is used by employees of the company, a high degree of computer ``literacy'' is not required, Bartlett says. He recalled setting up a demonstration of the program for NCR employees an a hotel in another city. A hotel employee put some information on himself in the computer and was quickly able to see the effect of several years of saving for retirement.

At this point, however, NCR has no plans to market the program outside the company, Bartlett said.

This is not the case with Metropolitan Life's program, called Showcase. It grew out of a discovery similar to NCR's, says James Valentino, vice-president for pensions, administration, and technology.

``When we asked companies how communication about retirement plans took place, we found it was through brochures, memos, and seminars. Employees often still didn't understand what it meant to them personally,'' he said. ``We found this information was being distributed at the convenience of the employer instead of the employee.''

The system combines the employee's own information with that from a central computer, Mr. Valentino said. The terminal is placed in a kiosk that can be put in a company's lobby, cafeteria, or some other busy place. This means it has to be simple.

``In developing it, we said it had to require no training and it had to be geared to every employee,'' he said. ``It also had have 24-hour availability, for workers on the night shift.''

Valentino said systems like these let employees get benefits data when they need it and also lets them do their own forecasting and modeling. And it's all private. Employees don't worry about asking a computer ``dumb'' questions, and they don't have to ask for personal information in a large meeting of co-workers.

But does this innovation actually encourage savings-plan particiaption?

``Yes, I think it does,'' NCR's Bartlett said. ``I think the interactive process with a computer generates a somewhat different attitide toward any information. The individual becomes involved in the subject matter and begins to take command of the benefits system.''