Focus Retirement Plan Meetings on Raising Enrollment

Sidebox: Face-to-face education drives increased savings

By Stephen Miller, CEBS Jul 12, 2012

Simplifying the annual enrollment meetings that many employers hold for their defined contribution retirement plan can help increase participation rates, according to a new white paper from Diversified, a Harrison, N.Y.-based retirement plan provider.

Automatically enrolling new employees into employer-provided 401(k)s, 403(b)s and other defined contribution plans is becoming more popular (used by 39 percent of employers, according to the Society for Human Resource Management's 2012 Employee Benefits survey report). But annual enrollment meetings—often held around the fall open enrollment season—remain important for educating employees about the value of participation, encouraging adequate savings deferral rates and reaching out to those who were not auto enrolled.

Typically, these enrollment meetings are scheduled in 45- to 60-minute blocks, with time allotted to suitably review an employer's plan, including eligibility rules, employer match formulas, loan availability—even distribution options. During this comprehensive review of plan benefits, enrollment can become a secondary focus, and as a result the objective of enrolling employees is not always achieved, according to the white paper, 10-Minute Enrollment: Scaling Back Meeting Content to Drive Higher Enrollment Rate.

"Results from traditional enrollment meetings have fallen short," said Patricia Advaney, senior vice president, participant solutions at Diversified and the author of the white paper. "We've witnessed firsthand the higher success rates that occur when enrollment meetings are shortened to 10 minutes—focused only on why employees should be in the plan, not on a comprehensive review of plan benefits. Subsequent targeted communications can address the retirement savings needs of specific employee segments, and are most effective when they get the right message to the right person at the right time."

Recommendations from the white paper include:

Keep easy-enroll cards within reach at all times. The use of paper might be "old school," but easy-enroll cards can get the job done quickly and efficiently. Consider keeping a supply of cards in the cafeteria kiosk, the HR waiting area and in the offices of all those who provide retirement plan information and education. These cards allow participants to take action immediately as opposed to enrolling online at a later time. Employees should be required to complete an easy-enroll card even if they decide not to enroll, as sometimes having to document that they declined a benefit is enough to get them to reconsider.

Create a sense of urgency. Asking employees, "Who is responsible for your retirement?," positioning matching contributions as an integral part of an overall compensation package and educating employees on the average deferral rate in their plan are all effective steps for creating a sense of urgency that can help spur enrollment.

Follow up with education. Education remains a critical component of retirement planning. If possible, new enrollees should have an opportunity for one-on-one sessions—onsite, online or over the phone—that can be used to focus on fine-tuning the employee's retirement strategy.

Measure success. Enrollment success can be measured in three stages by the following goals: get 70 percent of new employees to enroll at the initial enrollment meeting, get 50 percent of the remaining 30 percent to enroll when they become match-eligible and get 50 percent of the remaining 15 percent to enroll if/when they receive an automatic employer contribution. This equates to more than a 92 percent enrollment rate over time—a goal that's within reach of those implementing a 10-minute enrollment process.

To request a copy of 10-Minute Enrollment: Scaling Back Meeting Content to Drive Higher Enrollment Rates, e-mail

Face-to-Face Education Drives Increased Savings

Employees who attend personalized one-on-one sessions at the worksite about their retirement savings plan take more positive actions, including participating more and saving more, according to a new analysis from the Principal Financial Group, a provider of employee retirement benefits.

Personalized meetings can identify gaps in retirement planning, show how employer-sponsored benefits fit with personal financial needs and help individuals develop a personalized action plan.

“We know from face-to-face educational meetings that retirement savers benefit from hearing a person explain how the retirement plan works rather than having to shuffle through documents by themselves,” said Barrie Christman, vice president, individual investor services at The Principal. “Take it a step further with personalized one-on-one meetings on company time and significantly higher numbers of participants are taking actions that can help get them to the 11-15 percent contribution range—including employer match—that we believe is needed over the course of a career to have sufficient retirement income.”

One-on-One Adds Up

The analysis of participants covered by retirement plans administered through The Principal who attended a one-on-one meeting in 2011 found that 92 percent agreed to take a positive action and 80 percent completed the action. The top actions were to increase savings rates now and commit to continue to increase them in the future:

On average,deferral rates were 9 percent higher among one-on-one participants compared to those who attended a group educational meeting.

Nearly 10 times as many one-on-one participants (19 percent) chose to automatically increase their retirement plan contribution compared to only 2 percent of participants who participated in a group educational meeting.

On average, one-on-one participants chose to increase their contributions by 1percent each year for an average of five years.

“Even a small increase in savings can make a big difference in retirement security over time, especially when there is a commitment to keep increasing contributions,” said Christman. “While plan design components—automatic savings features, higher default rates and employer match—play a critical role in empowering participants to save effectively, face-to-face education is a key tool in the retirement readiness toolbox.”

Stephen Miller
, CEBS, is an online editor/manager for SHRM.

Related Articles:

Encourage Employees to Defer Adequate Pay to Their 401(k), SHRM Online Benefits Discipline, May 2012

Educate Employees on 401(k) Contribution Limits and Matches, SHRM Online Benefits Discipline, March 2012

Auto Enrollment Boosts 401(k) Participation Among Minorities, SHRM Online Benefits Discipline, October 2011

Report: Driving Improved Savings Behaviors, SHRM Online Benefits Discipline, October 2011

401(k) Plans Add Features to Drive Participation and Savings, SHRM Online Benefits Discipline, September 2011

401(k) Automatic Enrollment: Does It Help or Hurt Savings?SHRM Online Benefits Discipline, July 2011

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Retirement Plans Resource Page

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