Best Practices: Educating Participants About Retirement Plan Options

A successful retirement plan depends on plan design and administration but can significantly benefit from participants' active participation and engagement. An informed and engaged participant base can be the key to achieving the desired retirement plan outcomes. According to Empower’s second annual research study, “Empowering America’s Financial Journey – How People Save, Invest and Get Advice,” engaged participants save at a rate 56% higher than unengaged participants. Therefore, there is value in developing comprehensive education programs to help plan participants understand their retirement plan options, make informed decisions, and take advantage of the benefits offered by the plan.

Know Your Audience

Effective education programs must be tailored to meet the target audience's needs. Plan sponsors need to understand the demographics and needs of their plan participants to provide personalized education. Age, income, education, and job tenure influence the types of education that will be most relevant to different groups of participants.

Younger participants may be more interested in learning about the benefits of compound interest and the power of starting to save early. Older participants may be more interested in retirement income projections and investment strategies to optimize their retirement savings. Understanding these different needs can help plan sponsors deliver education programs that will most effectively engage participants.

Communication and Delivery

Clear and concise communication is essential for an effective education program. Plan sponsors need to deliver education in a manner that is accessible and understandable to the audience. Different delivery methods are available, including group meetings, one-on-one consultations, webinars, and online education tools.

While group meetings may be effective in providing an overview of plan benefits and investment options, one-on-one consultations may be more effective in providing personalized advice to participants. Webinars and online education tools may be most effective in reaching geographically dispersed participants or those who have busy schedules. Plan sponsors need to evaluate the effectiveness of different delivery methods and use a combination of approaches to reach the most significant number of participants.

Building a Comprehensive Education Program

An effective education program should cover a broad range of topics. Rarely can retirement plan decisions be made without the broader context of debt, income, budgeting, and taxes.

Plan sponsors can develop effective communication programs in partnership with recordkeeping, investment consulting, and financial wellness partners. However, key to the effectiveness of any education effort is ensuring that the solutions brought forth align toward the sponsor's goals, rather than competing for employee time and attention. Through those partner relationships, education can aid employees with a number of challenges facing them in their journey toward retirement. Topics that traditionally resonate with employee populations include:

  • Overview of plan benefits and investment options
  • Investment education, including risk tolerance and asset allocation
  • Retirement income projections and planning
  • Social Security and Medicare education
  • Estate planning and beneficiary designations
  • Financial wellness education, including budgeting and debt management
  • Engaging plan participants

While different populations require different tools and resources, education is increasingly moving to online / on demand modes of delivery, which increases the possibility for employers to employ new strategies to drive engagement, including:

  • Gamification: Turning education into a game with prizes and rewards
  • Incentives: Providing financial incentives for completing education modules
  • Personalization: Tailoring education modules to meet individual needs

Measuring Success

Plan sponsors should measure the success of their education program regularly. Participation rates and outcomes should be tracked and used to evaluate the effectiveness of the education program. Participant feedback should also be solicited and used to improve education delivery and content.

Plan sponsors are responsible for providing information and a desire to educate their plan participants to help them make informed decisions about their retirement plan options. Effective education programs must be tailored to meet the needs of different participant groups and delivered through a variety of channels. A successful education program should cover a broad range of topics and measure the success of the education program regularly. By investing in a comprehensive education program, plan sponsors can help their plan participants achieve their retirement savings goals and ultimately develop an appreciation for the critical retirement benefits the plan sponsor provides.

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice. Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s clients.

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