The economy eventually will get back into full swing, so employers should use this downtime to give their 401(k) educational campaigns a fall cleaning - reevaluating the program to ensure it's fresh and up to date.
Although employers have created multiple touch points around 401(k) education to maximize employees' retirement security, "each item in and of itself is not a silver bullet," said Jonathan Hayes, associate director of retirement benefits at Verizon Wireless. Hayes presented a breakout session at EBN's Benefits Forum & Expo in Boca Raton, Fla.
Hayes' session, "Driving Retirement Savings through Educational Campaigns," focused on the importance of targeting education to various employee populations and tips for engaging a 401(k) vendor in educational campaigns.
If printed materials or e-mails make up 90% of an employer's 401(k) education efforts, the company is not taking advantage of onsite educational workshops, which are probably more effective, Hayes noted.
And employers need to provide the most effective communication they can, as Charles Schwab research cited by Hayes shows that while three out of four workers understand they are responsible for their retirement, only one out of 10 tap into financial education programs offered by their employer.
When it comes to the material and content, "a simple and clear message will more likely drive employees to act as efficiently and immediately as possible. But you also have to target your audience appropriately," advised Hayes.
He reminded attendees that one size may not fit all when delivering messages about saving for retirement. For example, content should zero in on specifics, such as whether an employee is exempt or nonexempt, union or nonunion, and the department and job function of the worker.
Hayes also urged attendees to take proactive steps in working with their 401(k) plan provider. For example, an employer and its DC plan provider should try to create a robust educational website that houses financial planning tools, such a web seminars, a contribution calculator and total rewards statements.
A 401(k) intranet created for education on planning and saving for retirement should house general plan content, Hayes advised, such as summary plan descriptions, articles on saving for retirement, recorded webinars and planning tools and calculators.
About two years ago, Verizon Wireless rolled out an online tool that allows workers to assess their risk levels as investors. The tool gauges investor's risk levels from the responses of about 24 questions. The program, located on the company's intranet, recommends a list of funds based on an individual's risk profile results.
With an intranet Web portal, employers also can track online visits to see which content is resonating with workers. In addition, plan sponsors can discern when visits to the home page have reached a plateau, which means the HR/benefits team needs to refresh or re-advertise the content.
The Web site or portal should also contain a list of key definitions and concepts. "We use the word 'deferral' all the time, but some employees might not know the actual meaning of the word," Hayes said. "We asked some workers if they wanted to make a deferral to the 401(k) plan and they thought it meant a payout from the plan. That was a learning experience for us."
In addition, the intranet or portal should make it easy for workers to access the 401(k) vendor website. But first, "you have to determine whether the vendor's Web portal is a robust educational tool or simply a transactional processing website," Hayes noted.
Additionally, plan sponsors should ensure their onsite and in-person educational sessions explain why the company offers a DC plan, the benefits of saving for retirement through a 401(k), how much it will cost an employee to contribute and how much more they might have at retirement if they save appropriately, Hayes said.
Verizon Wireless employs about 82,000 workers. About four years ago, the company posted a 62% participation rate in its 401(k) plan.
In July 2008, the company enhanced its 401(k) plan by transitioning from a retail to an institutional fund lineup and adding target-date funds and a Roth 401(k) feature. The result? The company's plan participation rate now stands at 90%.
Despite employers' best attempts, it can be difficult to reach everyone. In such cases, employers should consider automatic plan features such as automatic enrollment, auto-increase and escalation, auto-rebalance and target-date funds, Hayes advised.
