By Matt Redshaw
A well-designed group retirement plan that is tailored to your organization’s needs is a lot like a new car. It has all of the features that your organization and staff require. It probably has some “luxury” features that are not essential but really make a difference to plan members.
However, if those features are not fully understood by the plan’s “drivers”, that is the employees, there will be at least two problems:
1. Missing out on the “Wow” Factor
Current and prospective employees will not fully appreciate the benefit that is being provided to them – reducing the “wow” impact of providing an exceptional plan to staff.
2. Employees Won’t Know How to Drive the Plan
Employees won’t have the necessary information to make good decisions about their own retirement – this is not only bad for employees but also for employers, who have a fiduciary duty to make plan details clear to members.
As a group plan provider, we have found it beneficial for organizations to work closely with a proactive plan provider on their communications strategy. And while any plan should be tailored to your organization, below is a 7-point communication plan to help get you started:
1. Clarify Plan Basics
It is surprising how many employees are eligible for retirement benefits but are not participating (a 2012 Fidelity study revealed that only 53% of eligible employees in voluntary plans in the US are participating). This is often because members are not aware of the basic details of the plan, such as their eligibility, how to enroll and where to ask questions.
2. Emphasize Plan Benefits
A great retirement plan can help your organization differentiate in the marketplace of talent. To get the best bang for your group retirement bucks, communicate these benefits to current and prospective team members. Be sure they understand the unique features, educational components and company matching that are available to them.
3. Set Realistic Expectations
A group plan is not intended to be an employee’s sole source of retirement income. It is one of the three pillars of a retirement plan: (a) personal savings, (b) government benefits such as CPP and OAS, and (c) company retirement plans. Communicating this clearly reduces liability for employers (avoiding misunderstandings about the role of the group plan) and helps employees own their own retirement plan.
4. Educate on Investment Selection
Investment options should be simple enough to not confuse members, but chosen prudently so members have the best opportunity to grow their funds for retirement. Once this is in place, it is key have a clear process that helps members determine their risk profile, select suitable investment options and adjust this as necessary over time.
5. Help with Retirement Projections
Employees find it motivating to see how their current actions can impact their future. Incorporate retirement projection tools into your group plan. This encourages members to illustrate the impact that their contributions, along with employer-matching, can have on their retirement. This creates buy-in to the plan and ultimately your organization.
6. Outline Exit Options
As plan members approach retirement most will be asking: “now what?” Proactively communicating with your employees is extremely helpful, and sets you apart. Work with your plan provider to come up with a communication process that clarifies options as members get close to retirement.
7. Suggest Financial Advice
While group retirement plans are a pillar of each employee’s financial strategy, they are not a substitute for the advice of a financial advisor. Encourage employees to seek the assistance of a financial advisor to put together a comprehensive personal strategy that includes all 3 pillars of their financial plan. This will put your staff on a firmer financial footing as well as help them appreciate and get the most out of the plan you’re investing in.
Build a Great Plan and Communicate Its Benefits
Like getting a great car, building a Retirement Plan that is tailored to your people’s needs involves understanding the “drivers” (employees), creating relevant features and then communicating those features clearly. Implementing a proactive communication strategy will help ensure your employees are engaged and see the value that you provide for them.