Having a retirement plan and a commitment to facilitating employees’ saving for their retirement is important. But the good that accomplishes can be blunted if the employer and the plan administrators don’t communicate about the plan effectively.
In “Effectively Communicating Your Retirement Plan Message,” an entry in Cammack Retirement’s blog, Earle Allen offers a reminder. “Communicating with employees is one of the most important aspects of any retirement plan,” he writes. “A plan may be carefully designed to help participants achieve their retirement objectives, but if the plan sponsor does not effectively communicate the key information, the participants may not have the understanding they need to succeed in reaching their goals.”
Allen writes that there often is “great emphasis” on communicating with employees about retirement plans, but it is not always effective. “Despite the effort and good intentions that go into communication programs and initiatives, most retirement plan participants do not feel confident that they will have the financial resources saved to enable them to maintain their standard of living in retirement,” he says.
Allen identifies a variety of reasons why this is case, including competing priorities in participants’ lives, timing of communication, and the multiplicity of electronic messages and frequency with which they are delivered.
Allen does have some suggestions regarding how to ameliorate the situation. “For communication to be effective, it needs to be delivered in an appealing format with a message that resonates with the individual,” he says.
His suggestions include the following.
Segmenting participants by such factors as age, salary, longevity in the work place, and current savings, and communicating in a way that best reaches those in each group. “By tailoring the message more specifically to individual circumstances, the communication feels personalized and participants are more likely to pay attention, ultimately generating better results,” argues Allen.
How information is communicated. Conveying information through different media is important in order to meet the different ways that people learn, Allen says.
Type of information. Participants do not all want the same kind of information, Allen argues. Some want facts, but others want in-person communication in order to better make decisions.
Allen also suggests that working with recordkeepers can be helpful in making communication more effective and useful, as well.