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Google+ Hangout: Milliman mobile benefits app

March 21st, 2014 No comments

Retirement plan enrollment can overwhelm employees and discourage them from participating in benefits. Milliman’s mobile app targets and reduces choice aversion among participants, helping increase enrollment rates and maximize plan value.

In this Hangout, Craig Burma discusses how Milliman’s mobile app technology is helping retirement plan participants and sponsors meet their needs.

For more information on the Milliman mobile benefits app, click here.

Milliman enhances mobile apps for retirement plan participants, incorporates behavioral finance principles

January 28th, 2014 No comments

Milliman today announced enhancements to its mobile “app” technology that help to further simplify the mobile experience for participants in retirement plans administered by Milliman. By incorporating behavioral finance concepts, the enhanced technology furthers Milliman’s mission to provide participants with a comprehensive yet accessible user experience that serves all their needs, regardless of the way in which they access their plan.

“Plan participants increasingly expect a simple, integrated series of interactions with their retirement plans,” said Milliman Principal Kevin Skow. “We’ve boiled our mobile experience down to the kinds of things participants can do easily, without being overloaded with choices or information that can discourage their engagement.”

New mobile functionality includes:

• The ability for participants to enroll in a plan by making one simple election—selecting a deferral rate
• The ability for active participants to review and change their deferral elections
• The ability for participants to set annual automatic increases to their deferral rate

For more information, go to http://milliman.com/benefitsapp. You can access our mobile site, or download our mobile apps in the App Store, the Amazon Appstore , or on Google Play.

Let’s talk about retirement

December 4th, 2013 No comments

In this Raconteur article, Colette Dunn, a consultant in Milliman’s London office, summarizes key conversations retirement advisers need to have with individuals during preretirement and at-retirement stages. Here is an excerpt:

Retirement has also become less of a definite line in the sand and has evolved into a journey where people gradually work less. A total of 76 per cent of those polled for the 2012 Attitudes to Pensions survey said that they would do some paid work beyond the SPA.

Many people have existing pension provision and the number of people with some form of pension will increase as a result of auto-enrolment. However, people are often disengaged with the process of saving for their retirement. Of those questioned in the survey, 62 per cent with a private pension still had no idea or only a vague idea of what their retirement income would be.

There is a need to engage with people about their retirement savings. Once people get into their 50s, retirement seems much more real and within reach. This is a key time to start a conversation with people about getting a better understanding of what income they will receive in retirement and, if necessary, how they can improve it.

Starting a conversation with people in their 50s or late-40s is key as they can be brought on board to go through the life stages; taking them from pre-retirement to the eventual point of retirement and onwards through retirement where their needs will continue to evolve.

In many cases there is currently a disjoint with the “conversation” that the financial services industry has with individuals and this needs to be resolved. There are signs that some in the industry are starting to acknowledge the need to get closer to customers as they approach retirement and this trend needs to grow.

How a website for pension employees can help employers

November 12th, 2013 No comments

Hart-KevinHaving a website for pension employees isn’t just good for the employees, it’s also good for employers. A website for pension employees can save an employer time and can help communicate retirement benefits. And in today’s world, some employees will be more comfortable doing as much as possible online.

Communicating directly with employees through a participant website can often be a time-saver. A participant website can allow employees to send emails to the employer. Certain self-service functions can also be made available on the participant website. This would include allowing employees to change their beneficiaries, or current addresses, or even begin termination/retirement processes, all online. Another self-service possibility on the participant website is allowing retirees to change their direct deposits or tax withholding information online. This is an always growing area and, as time goes on, more and more self-service functions will be made available to employees.

A website for pension employees can also save an employer time by making certain documents available there. Frequently requested documents can be made available for download, including summary plan descriptions, annual funding notices, beneficiary designation forms, frequently asked questions, and more.

Benefit calculations can be posted directly to an employee’s portion of the website. Periodic benefit statements can also be posted online and are thus always available to employees. This gives employees an opportunity to see past statements and how their pension benefit is growing. Any types of calculations can be posted on the website and only made available to targeted employees. This includes final termination or retirement paperwork that the employee must fill out.

But perhaps the biggest benefit of a website for pension employees is allowing employees to project their retirement benefits and become comfortable with their retirement incomes, using online tools to run projections at different termination and retirement dates. Employees can see their accrued benefit as well as what their benefits would be if they stayed employed with the employer up to their normal retirement dates.

The website can also estimate Social Security benefits at various beginning dates and can even include the defined contribution (DC) benefits (401[k], 403[b], etc.) offered through an employer. Enabling employees to combine all of their retirement benefits and other retirement income, as well as their spouses’ retirement income, can give employees a picture of their total retirement income. Employees can run various “what-if” scenarios to see how their retirement choices might affect future benefits. A participant website is one way to show employees the value of total retirement benefits packages.

If you are an employer who would be interested in creating or enhancing a website for your pension employees, then now might be a good time to investigate further.

Mandatory retirement savings in the United States? Why not?

October 18th, 2013 No comments

Moen-AlexIn response to the continuing retirement crisis in the United States, some interesting survey results have been published. American workers want to retire at a reasonable age and need to have adequate funds saved to live comfortably; the majority is very concerned that money won’t be there.

A recent global poll by CFA Institute showed almost half of respondents would prefer a “mandatory, government-imposed solution” to retirement savings. Following that, 22% of respondents chose an “elective, whereby employees are automatically enrolled in private retirement plans but can opt out if they so choose” solution. Almost 70% of respondents want some form of automatic retirement plan entry. Even with a smaller survey population, that’s a telling number.

In the March 2013 Employee Benefit Research Institute’s Retirement Confidence Survey, only 66% of workers report that they or their spouse are currently saving for retirement. In 2009, this number was 75%. Many Americans may not want to be in charge of their retirement, and unfortunately, some may not have the skill set to accomplish it. In a study conducted by the Organization for Economic Cooperation and Development, U.S. respondents lagged behind 18 other countries in mathematical skills and 12 countries in literacy.1 While this points at the larger issue of education in the United States, it does support the argument that most workers aren’t able to manage and prepare for their retirement on their own. Workers may prefer to rely on their employer and/or the government to provide a meaningful retirement plan that will sufficiently provide for their golden years. In addition, such results highlight the need for more extensive and perhaps mandatory employee education. There are many options available to plan sponsors in this regard.

The shift from relying on defined benefit pension plans and Social Security for retirement income to relying on 401(k) plans and maybe Social Security (younger generations, cross your fingers) has hurt more workers than it has helped. Social Security typically makes up for less than half of a worker’s preretirement income,2 and with poor investment returns in recent years (for both the federal government’s Social Security funding efforts as well as 401(k) plan investments), employees might feel like they are fighting a losing battle. All agree that changes must be made.

Perhaps it is time to consider mandatory retirement plans in the United States. One such example is Australia’s retirement system, a highly regarded, two-part “means-tested government benefit and mandatory savings account financed by employers.” However, in Wade Matterson’s November 2012 Benefits Perspectives article, he shows there is no easy answer. The government portion of retirement savings is always, and most likely always will be, at the mercy of changing political environments. In any event, maybe we have reached the point where mandatory education is called for in the United States.

Sources:

(1) Layton, Lyndsey. “Education.” Washington Post., Oct. 8 2013. <http://articles.washingtonpost.com/2013-10-08/local/42804364_1_literacy-education-secretary-arne-duncan-adults>.
(2) Social Security Administration. “Understanding the Benefits.” 2013. <http://www.ssa.gov/pubs/EN-05-10024.pdf>. (page 4)

Travel budgets improve, but webinars still effective for workforce communications

September 30th, 2013 No comments

Brantley-JasonThe stock market and economy have shown much improvement since the lows of 2008 to 2009. We remember those dark days, right? All those months spent avoiding retirement account statements, all those hours wasted watching Jersey Shore (ugh), and of course the budget-friendly “staycation.” Families weren’t the only ones getting in on the act when it came to cutting travel costs. Employers moved quickly to adopt webinars as a low-cost, preferred communications channel with employees.

Now that the economy is turning the page, companies are showing a renewed interest in meeting employees or prospective employees face-to-face. What are the implications for webinars? Will “webinar” join “staycation” in the lexicon as a word only accessed in times of trouble? That’s doubtful.

Webinars remain a popular method for workforce communications because of many benefits:

Inexpensive: Most online services cost no more than $100 per month per presenter.
Instant-On: No need to schedule events far into the future and coordinate travel schedules. Launch that new product or deliver that important message at any time via a webinar!
User-Friendly: Today’s webinar programs are easy for presenters to set up and simple for participants to access. Often, it takes one click to participate. Webinars can also be recorded for future playback.
Eco-Friendly: More firms are choosing to demonstrate their environmental awareness by opting for webinars whenever possible.
Greater reach: Stay connected to your distributed workforce and remote employees. Many people choose to receive content electronically. Millennials in particular are highly adjusted to receiving news, information, and training online.

Which method is best for delivering updates or training to employees? Not all messages require us to hop a flight to the next town in order to communicate effectively. Keep both options on the table at all times, and do a “SWAT” analysis to determine which approach works best.

Social: What level of engagement is required in order to reach your objective? Face-to-face meetings offer the highest potential level of social interaction with employees.
When and where: How soon do you need to meet and in how many locations? A webinar is the quickest way to reach multiple locations without time lost to traveling.
Affordability: What’s your budget for communicating the message? Face-to-face meetings are significantly more expensive.
Technology: Do you want to incorporate video, polling, and quizzes? Will you want the event recorded? Modern webinar programs can be quite interactive, and in some situations, employees are better off at their keyboards such as when you’re rolling out new systems and software.

Milliman’s communications consultants are constantly at work helping clients assess the right content and the right mix of channels for delivering training and education, specifically in the areas of employee benefits and retirement planning. Milliman’s in-person and eLearning services can help your employees prepare for a brighter future.

Tips for promoting a defined contribution plan to employees

September 19th, 2013 No comments

Employers who actively promote and communicate their retirement plans can demonstrate its importance to employees. In Jinnie Regli’s new article, she provides 10 ideas that plan sponsors may use to help employees get the most from their defined contribution (DC) plans. Here is an excerpt:

Get your employees in the plan.
Allow employees to enter the plan on day one. New employees are excited about the new opportunity so get them enrolled from the very start. Hook them in while it’s fresh on their minds so they will be used to seeing the deduction in pay right from their first check. Delayed entry dates tend to lead to employee inertia.

Consider adding an automatic contribution arrangement.
The most effective way for plan sponsors to encourage participation in their retirement plans is through plan design. An automatic contribution arrangement (ACA), more commonly known as automatic enrollment, is a feature that can be added to existing 401(k), 403(b), 457, SIMPLE IRAs, and SARSEP plans. This arrangement allows the employer to automatically enroll a newly eligible participant unless the participant makes an affirmative election not to participate.

When the arrangement is adopted, the plan sponsor selects a default contribution percentage, which is automatically reduced from employee’s wages upon meeting the eligibility and entry requirements of the plan. Participants may “opt out” of this automatic contribution. Studies show most employees will leave their contribution rate at the plan default or even increase their elections. There are alternative methods of automatic contribution arrangements; refer to your plan consultant for more information.

Offer an employer-matching contribution.
Would you walk past a $100 bill on the sidewalk? Would you turn down a work bonus? Most would answer no to these questions. Retirement in this day and age is largely going to be self-funded; offering an employer-matching contribution is like offering your employees a bonus. If your employees take saving for their retirement seriously and contribute, you’ll add free money to their accounts. As an employee it’s next to impossible to turn that down. A recent Wells Fargo survey indicated that 85% of those with a 401(k) offering a company match contributed enough to receive the maximum match. Matching is an effective way to work hand in hand with employees to fund their retirement. If high turnover/low employee retention has deterred you from implementing a match in the past, why not implement a vesting schedule?

Helping key employees understand the benefits of a non-qualified plan

August 6th, 2013 No comments

Cannaday-JulieNon-qualified plans are primarily available to highly compensated employees to provide them an opportunity to defer more income for retirement, above the IRS limits. There are many decisions that have to be made at enrollment: How much to defer from base or bonus, when to schedule a distribution, which investments to choose, etc.—and enrollment occurs annually with some elections that cannot be changed until the next enrollment period. What’s more, this type of plan can have many differences or nuances from company to company.

How can you help employees understand and recognize the benefits of a non-qualified plan at your company?

Personal enrollment consultations by a retirement specialist can increase the benefit perception, thus the success of your non-qualified plan. During a personalized consultation, the retirement specialist should:

1. Highlight the plan details including a quick review of 401(k) plan IRS limits.

2. Ask questions to identify participation goal:

  • Is the employee’s goal to maximize the company match or save a percentage of base pay and/or bonus to have enough for retirement?
  • Asking questions with possible reasons for pursuing a non-qualified plan helps the employee to identify a reason to participate.

3. Review deferral election options:

  • Consider if deferral includes base pay and bonus, or if there is a separate election for bonuses.
  • The consultant should be able to quote current base pay plus any projected target bonus, thus providing a recommended deferral percentage to meet the participant’s savings goal.

4. Highlight the investment options. Note that this review can be time-consuming, especially if the options are different from the company 401(k) plan. If they have available time, complete the recordkeeper’s investor profile quiz to get a suggested asset allocation.

5. Explain distribution options. Distribution timing is crucial for tax purposes since these non-qualified account cannot be rolled over to an IRA or other retirement plan. The distribution election tends to be the most challenging decision for participants, so be sure and highlight the rules for changing the distribution timing according to IRS Code Section 409A regulations:

  • The change must be submitted at least one year before the scheduled date of a lump sum or first installment. If a payment is scheduled to be made upon separation from service, the election change will not apply if the separation occurs within one year after submitting the change.
  • The distribution must be delayed by at least five years from the original payment date. An earlier payment date cannot be chosen.
  • No changes can be made once a distribution is in pay status.

Depending on the plan document there may be an opportunity to have more than one distribution election. This is a good time to explain that 409A benefits don’t have the same level of benefit security as do qualified ERISA plans. If the NQP is funded in a rabbi trust, that trust is still part of the company’s general assets, meaning they would be subject to creditors’ claims in a corporate bankruptcy.

6. Gather beneficiary information or explain how to enter the information on the plan website.

Recently, Milliman consultants conducted personalized NQP enrollment consultations for a client. Below are a couple of responses from its executives:

“My meeting was great. She helped me understand my options and what I needed to do moving forward to be prepared. She is very knowledgeable!”

“The representative offered objective feedback that was not biased toward any particular action plan. She answered all of my questions about the differences between my 401(k) plan and a non-qualified plan. We discussed several options for me to personally address. Very helpful!”

It all goes to show how a simple meeting that lays out the basics of your company’s non-qualified plan may go a long way in helping to increase its benefit among executives and other key employees.

Retirement account updates on the go

June 4th, 2013 No comments

PlanServe Data Systems and Milliman recently announced their collaboration to deliver retirement plan information to participants via mobile applications using PlanServe’s Relevant Mobile Platform. This platform enables the mobile applications to deliver a rich experience for participants to understand, view, and manage their retirement accounts while on the go.

“The PlanServe methodology allows Milliman to roll out these new features to our participants faster, with less expense and risk,” said Craig Burma, principal and director of Milliman’s Benefits Resource Center. The new technology allows Milliman to provide retirement plan participants with fast and secure access to their account information. “By delivering rich XML data to our mobile apps, we can build a closer relationship with the participants on a day-to-day basis,” said Burma.

Can a targeted retirement communications strategy hit the bullseye?

March 18th, 2013 No comments

A targeted approach is the most effective communications strategy an employer can implement to help employees understand their retirement plans. Milliman’s Denise Foster and Genny Sedgwick offer perspective on the benefits such a tailored communications approach can have on plan participants in this Business Insurance article (subscription required).

Here is an excerpt:

Most American workers aren’t saving enough toward retirement because they are struggling financially — often living paycheck to paycheck — and do not have the discretionary cash needed to build a retirement nest egg, experts say.

A good retirement communications and education program recognizes this and offers plan members help with such financial fundamentals as budgeting and saving.

The most effective way to communicate these lessons is with a targeted approach that takes into consideration plan members’ ages and other demographic characteristics. The messaging also should be continuous, occurring throughout the year, experts advise.

…“One of the best approaches is a real targeted one,” said Denise Foster, a principal and communications consultant at Milliman Inc. in Seattle. “It’s a lot about tailoring the message to the particular employee group…”

“In financial services, we use a lot of terms that don’t resonate with participants, and they shut down and stop learning,” said Genny Sedgwick, a principal and practice leader for defined contribution plan record-keeping at Milliman Inc. in Seattle. “People feel like they need to be the expert, and they realize they’re not. At the end of the day, participants just want you to guide them.”

To learn more about effective employer-to-employee communication strategies, read this article by Denise Foster, Sharon Stocker, and Heidi tenBroek.