Engage Employees through Targeted Retirement Plan Communications
By Rich Rausser, CPC, QPA, QKA | Senior Vice President, Client Services | Pentegra
Your work force may include a number of employees who are not taking full advantage of your retirement plan and are at risk of not having enough savings to retire comfortably. How can plan sponsors engage employees and encourage them to use their retirement plan effectively? Tailoring employee communications and education can help. Below, we answer questions you may have about targeted communications.
Why do targeted communications encourage greater engagement? Different groups of employees often have different retirement planning needs. When a retirement plan communication is tailored toward a specific group, that message becomes more relevant. For example, younger employees may be more interested in a message about the importance of getting an early start on saving and the power of compounding than older employees who are getting close to retirement age.
How should employees be segmented? It really depends on the demographics of your work force. Grouping employees by life stages is a relatively common approach. But other criteria, such as income or educational level, also may be useful.
In addition to demographics, you may want to look at retirement plan behaviors of your employees. For example, messages can be targeted toward employees who do not participate in the plan, employees who do not contribute enough to receive the full employer matching contribution, employees who do not increase their contributions over time, and employees who take frequent loans from the plan.
Should retirement planning messages be gender specific? Women have a longer average life expectancy than men do. They are also more likely to have stopped working at some point during their careers due to the demands of their families. Workshops, articles, and other communications that discuss issues like these may encourage female employees to make sure they’re taking action to have sufficient income during retirement.
Should plan communications target specific cultures? If a workplace has a significant non-English-speaking population, providing bilingual plan communications and presentations that are also sensitive to specific cultural differences can help boost plan participation.
What strategies may be effective when communicating with younger employees? Younger employees need information on the importance of joining their retirement plan and contributing as much as possible. Communications should concentrate on how the plan works and on the advantages of pretax contributions, tax-deferred compounding, starting early, and contributing regularly. In addition to tailoring the message, also consider how employees will receive the information. Younger employees may be interested in learning about financial issues through social media, for example.
Which topics will resonate with older employees? Participants who plan to retire in the next five years need information on transitioning from accumulating assets to spending those assets in retirement. Older workers generally are interested in information on shifting their account’s asset allocation into investments that are more conservative. Older employees also should understand their plan’s distribution options and the need for a withdrawal strategy during retirement that helps guard against depleting savings too quickly. The impact inflation may have on their expenses and investments is another topic of interest.
Engaged employees who have received retirement planning information that is relevant to them are more likely to see the value of your retirement plan and to feel empowered to make the most of the important benefit you are providing.