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Help Your Employees Save for Retirement with Targeted Education

November 21, 2018 3 Min Read Employee Benefit Plans
Roman Leshak, Jr., CPA Director, Audit & Accounting, Employee Benefit Plan Group Leader
retirement plan audit

An estimated 79 percent of Americans work for an employer that provides a retirement plan, yet new research from the U.S. Census Bureau suggests that only 41 percent of those employees contribute to their retirement plans.

Retirement plan education has typically been a one-size-fits-all approach, with a general discussion of plan provisions and a simple demonstration of the online system features. These education sessions, whether in person or online, are primarily attended by those who are already participating in the plan and have an interest in saving for their own retirement.

However, the majority of employees who do not participate in their plan are intimidated by the topic of retirement. For them, these training sessions are oftentimes complex. Plus, organizations often have varied workforce demographics, from professional service organizations with very high participation rates to large manufacturers that have a transient work force with limited access to computers. These factors can make it challenging for plan sponsors to effectively reach non-plan participants, increase overall plan participation, and improve important metrics such as average deferral rates and participant balances.

Beyond fulfilling their fiduciary responsibility, plan sponsors should be doing everything in their power to help their participants save enough to retire. More and more companies are learning that the historical one-size-fits-all training approach is not always the most effective way to involve various types of employees and increase participation. The growing trend among recordkeepers and plan advisors is to focus on individual financial wellness by using data analytics to provide targeted participant education.

Personal financial wellness provides employees access to basic financial education such as budgeting and can assist participants in determining their ability to contribute additional amounts to their retirement plan by changing their personal spending plans. Employees may not realize how much they spend on groceries or gas on a monthly basis and find themselves living paycheck-to-paycheck. Showing these employees complicated financial projections may not be useful. However, helping them see how small changes in their personal spending plans can set them up for retirement 10 to 20 years down the line is translating into greater participation in many companies’ plans.

Data is the driving force behind this more tailored approach. Data analytics allow third-party service providers to use participant demographics to target individuals and devise a specialized education plan. It can also help plan sponsors identify participants who are not contributing up to the full matching limit, are missing out on catch-up contributions, or are not contributing at all. This specific identification allows the delivery of customized education on a variety of topics with the goal of increasing employee understanding of and participation in the plan. Giving employees information on topics that are specific to their circumstances instead of the entire retirement plan process is much more effective.

Both of these approaches are starting to reap benefits for many organizations by helping employees learn more about their plans, increasing participation as a result. Although a large retirement gap still exists for many workers, adopting initiatives like these can help to narrow the gap.

Roman Leshak, Jr. can be reached at Email or 215.441.4600.

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Roman Leshak, Jr., CPA

Roman Leshak, Jr., CPA

Director, Audit & Accounting, Employee Benefit Plan Group Leader

Employee Benefit Plans Specialist, Owner Operated Private Companies Specialist, Private Equity-Backed Companies Specialist

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