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Tailor Your Retirement Planning Messages

Overcome the barriers of age, ethnicity or language. Urge all employees to save and invest.

September CoverCindi Kirkwood, HR manager at The Gant Aspen in Colorado, has a problem: Fewer than half of her employer's 100 employees participate in the condominium hotel's 401(k) plan. About 40 employees are Spanish-speakers; of those, last year only five were participants. Kirkwood's challenge: to make the benefit meaningful to all employees and boost participation to maintain a viable plan.

So, during open enrollment in November 2011, she invited bilingual presenters to explain retirement and health benefits to Spanish-speaking employees. The result of the five-hour presentation? Now 11 Spanish-speaking workers are signed up. It's just a start—but it's a pretty good start—toward Kirkwood's goal of full participation.

And she discovered a secret: the power of targeted retirement communication.

Kirkwood says participation increased because instead of just translating retirement information, the presenters addressed the issue in terms of Hispanic culture. Such targeted retirement plan communication strategies—which may address employees' retirement plan behaviors, gender, culture and years from retirement—can increase participation in and contributions to retirement savings plans.

Make Messages Resonate

Retirement communication focuses on increasing participation and contribution rates, discouraging employees from taking loans from their 401(k) accounts, and ensuring that investments are age- and risk-appropriate.

The primary message for all employees is "start early. Help convey the power of compounding, and get people over the hurdle of procrastination," says Barbara J. Hogg, retirement communication leader for Aon Hewitt. Tell workers to do it now because that will give them more options down the road, she adds.

Some employers stop there. They "are not willing to send out different messages to different populations," says Ellen Blumstein, assistant vice president for the PlanSmart program at MetLife Inc. "It's easier to send an e-mail to everybody, instead of finding the e-mail addresses for those employees under 50 and those employees over 50."

And yet, "the more targeted a message is, the more relevant it is to employees. It resonates," she adds.

The more targeted the retirement message is, the more relevant it becomes to employees. It resonates.

HR practitioners confirm this: "We've noticed better attendance when the workshops are tailored for certain groups," says Sheila Donahue, manager of HR benefits, communication and education at insurer Unum in Chattanooga, Tenn., with 10,000 employees worldwide.

Categorize Employees

To target retirement communication, first segment the employee population into groups by gender, age, cultural background and retirement plan behaviors. Consider classifying workers by type of participation. Identify employees who do not:

  • Participate in the retirement plan at all.
  • Contribute enough to meet the company match.
  • Escalate contributions over time.
  • Adjust the risk of their investments as they age.

Look at the data and understand your employee population's behaviors, advises Michelle Hicks, SPHR, Buck Consultants' director of communication practice. "For example, during the recession, I had some clients who struggled with employees taking more loans from their 401(k) plans," she says. "After understanding the behavior of the issue we wanted to change—to stop taking loans—we looked at the population's demographics. … The population taking greater loans included lower-wage workers. When things got tight, the employees reached for what they perceived to be a quick source to cover the gap.

"To counter that behavior, we responded with a campaign that talked about the real cost of a 401(k) loan—a cost that can never be recovered when you lose the opportunity to grow that money."

For employees not meeting the employer's match, "point out an opportunity folks are missing," Hogg says.

Paul M. Hamburger, a partner at the Proskauer law firm in Washington, D.C., adds, "Matching employer contributions can be explained as an 'instant return' on your money. If you save a dollar and the employer will match it with a dollar, you've doubled your money instantly and then have the ability to earn more from there."

Rebecca Harmon, PHR, vice president of HR for DeRoyal, a health care manufacturer with 2,000 employees in Powell, Tenn., created three videos that cover specific topics for different demographic groups. A new-hire video "provides information about how to get started in our plan. The second video illustrates how savings with a 401(k) plan works and explains our plan funds. The third video addresses options and information in our plan, such as loans and fees. We are able to link these videos to our intranet site, e-mail them or show them during meetings," she says. Her retirement plan participation rate has increased by 3 percent in three years to 78 percent.

At Unum, "targeted e-mail communications go out to 401(k) participants who have invested in only one fund, are not receiving the full company match, and auto-enrolled and have not increased the savings rate since the date of enrollment," Donahue says.The e-mails encourage employees to diversify their portfolios or increase contributions.

Be Gender-Specific

Because they are expected to live longer than men, women should be encouraged to "take some actions to ensure they cannot outlive at least a portion of their savings," says Mark Manin, a financial advisor for Baystate Financial Services LLC in Wellesley, Mass.

Moreover, some "women tend to be more in and out of the workforce. They may be more tempted to dip into it when they leave a job. They need to be saving more," Hogg says.

In large companies, professional groups for women, such as employee networking groups, "may do targeted workshops," Blumstein says. "Sometimes, women are more comfortable asking questions in a group of women."

Unum employs more women than men. "On occasion, we have guest speakers that offer female-only seminars on women and investing," Donahue says.

Be Culture-Specific

Recognizing cultural differences can help HR professionals address certain employee needs. For instance, according to the ING Retirement Research Institute's 2012 Culture Complex report, Hispanic and black workers are less likely than the average employee to contribute the amounts necessary to secure the maximum employer match.

"Know the priorities of your employees, what makes them tick and what their concerns are. What works with white-collar, professional employees doesn't resonate for the whole," says Melissa Burkhart, founder and president of Futuro Solido USA, a translation and culture firm in Denver. Do not "assume that an employee who is conversant in English and able to conduct his job is sufficiently fluent to understand financial material."

However, translating retirement material is only the first step in educatingmembers of cultural groups. "A translation does not address cultural issues," Burkhart says.

"Different cultures have different trust systems and biases, [as well as different] attitudes about saving and investing," Hogg adds.

Burkhart explains, "There's a tremendous mistrust among Spanish-speakers of banking systems. We have to emphasize that, despite recent downturns, if you are participating in the market over a long period of time, our investment system has a solid track record. It is important to emphasize the foreign concept of compound interest, the idea that even if you don't put more in, the account will keep growing.

"Stress how retirement plans are a win for all people involved," she continues. "Spanish-speakers figure if employers want them to do something, there must be a catch. There is a deeply entrenched 'us vs. them' mentality among Spanish-speaking immigrants. They are particularly suspicious if there is a match. Explain to them there is a tax advantage for the employer and that is why the employer is matching money. Equally important is complete transparency as to how the vendor of the plan gets compensated."

Burkhart recommends presenting retirement information in person. Yet, "It can't just be someone who is bilingual and financially literate. It has to be a person who understands and can address cultural impediments and obstacles. When such a person is not available, we create a video," she says.

Be Age-Specific

"Have a financial education program that offers workshops for different age groups," Donahue says.

Gary A. Carpenter, financial advisor for Robert W. Baird & Co., a financial services company in Towson, Md., notes, "Younger employees tend to be less inclined to participate in the retirement plan or to choose lower deferral rates." When they hear the "message that 'small sacrifices now prevent larger sacrifices later,' younger employees learn the importance of an early start to retirement.

"On the other hand, older employees generally have higher participation and deferral rates but will often neglect to periodically review their investment strategies. The focus of the message shifts to maintaining an appropriate mix" for their individual situations.

Young workers. The primary message: "Contribute early and often, and be mindful of increasing contributions as you get pay increases," Manin advises. Compound interest benefits them. Many do not yet have dependents, mortgages and other expenses vying for savings dollars.

"Habits you form from a young age are typically the ones you take forward," says Stig Nybo, president of Transamerica Retirement Services in Los Angeles.

At Western Kentucky University in Bowling Green, "Our employees still have a defined benefit [pension] plan through our state retirement system, and participation is mandatory as a condition of employment. However, all employees need to know how the plan works and understand that the pension alone probably won't be enough to live comfortably in retirement," says Kari Aikins, SPHR, assistant director of total compensation.

"We encourage employees to begin supplementing their plan as early as possible," Aikins explains. "All of our younger workers need to be prepared for the possibility of Social Security not being there to supplement their pensions; therefore, they may need to plan for an income gap that our older workers may not [have].

“Additionally, health care spending in retirement for our younger population may create a burden that our older workers may not face, as our state retirement system continues to reduce the benefits and increase the cost of those plans for future retirees.”

Hogg points out that HR professionals should become sensitive to the photographs in retirement plan literature. They “almost always picture older people. What does that do? It turns off the 20-year-old,” Hogg says. Create a mix of pictures that resonate with employees. “What is the older person doing? Golfing? Sitting on a beach? Those are stereotyped pictures of retirement with a narrow audience. Rethink the imagery and the messages.”

Middle-aged workers. “The message: ‘Am I on the right path? Am I contributing enough?’ ” Hogg says.

Adds Hicks: “Practical information about budgeting can be useful to help them budget for retirement savings. A mid-career employee who signed up to contribute 3 percent of his pay 15 years ago and hasn’t increased his contribution since needs messages about the importance of contributing more.”

Older workers. The message for people nearing retirement in the next five years: “Detailed planning, not just accumulation but also asset allocation. When can you afford to retire? How can you take [money] out to make sure that it lasts a lifetime?” Hogg says.

Blumstein agrees that “It’s not just about accumulating assets but how to use those assets to generate income.”

Manin recommends sponsoring presentations on topics such as estate planning, housing for the elderly, Social Security and Medicare, even though employees encounter these decisions after they finish working.

“If your employee population is retirement-eligible but has not properly prepared for retirement, they may work longer, which may or may not be in the best interest of the employer,” he explains. “It’s a costly problem for employers if they don’t want the 77-year-old employee to stay. If they terminate that person, there is the likelihood of age discrimination litigation. Or, they face costly severance or early retirement plans. It’s much more employee-sensitive and cost-effective to get older workers to start thinking about the reality of finishing out a career.”

Moreover, “When employees don’t feel financially prepared for their futures, they worry. There is much lost productivity as a result of financial ill health,” Blumstein says.

The HR department at Western Kentucky University annually hosts a Spring Retirement Week, with sessions for many employee groups. “The beginning of the week is geared toward our new employees or beginning savers,” Aikins explains. The end of the week focuses on those within five to 10 years of retirement. It includes a session for faculty eligible for retirement who plan to teach part time. The Social Security Administration conducts a session on its benefits and Medicare. Other sessions serve women and offer step-by-step financial planning for young adults. Subsequent survey research gathers feedback and identifies topics for future sessions, Aikins says.

HR professionals at the university also turn to providers for advice, assistance and sponsorship. The providers sponsor lunches for participants and host presentations.

“If you feed them, they will come,” Aikins jokes. She also asks vendors to provide door prizes.

Be an Advocate

Why do HR professionals need to wake employees up? Only 14 percent of Americans say they are “very confident” they will have enough money to live comfortably in retirement, and 56 percent report they have not even tried to calculate how much they need to save for retirement, according to The 2012 Retirement Confidence Survey from the Employee Benefit Research Institute in Washington, D.C.

HR professionals should encourage participation, Nybo says. “The retirement industry has positioned itself as ‘Don’t worry about it; we’ll take care of everything.’ They have the call centers and the online content, but what they don’t have is the personal relationship with the employees,” he says. Targeted messages that are relevant for certain groups—based on age, gender, cultural background or retirement plan behaviors—foster that connection.

Understand the plan. “Be the go-to person in the organization. Be forceful,” Nybo advises. “It’s altruistic to get people into the plan. It’s powerful to help someone see the light. Most people are not exposed to retirement planning in school and see it for the first time in the workplace.”

Indeed, one of your employees may one day reflect on how targeted retirement advice arranged by an HR professional made the difference between being financially well-prepared vs. ill-equipped in the golden years.

The author, a former HR generalist and trainer, is a freelance writer in Wixom, Mich.

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