Category Archives: Communications

Retirement plan enrollment considerations

Employers are constantly seeking new ways to get employees enrolled in their retirement plans. This Plan Adviser article quotes Milliman’s Gerald Erickson and Jinnie Olson discussing how automatic plan designs and targeted communication strategies can affect the enrollment of participants especially Millennials.

Here is an excerpt:

When it comes to automatic plan design, says Gerald Erickson, a principal at Milliman Inc. in Minneapolis, the adviser community obviously supports these features. Still, it is important to acknowledge that while popular opinion claims auto plans are the next logical step in improving participant outcomes, “from a plan sponsor and an administrator/recordkeeper perspective, automatic plans are not easy to administrate.”

There’s a lot that goes on behind the scenes, he says, and that may include some mistakes. “I think it’s important for people to understand that it’s not as easy as just getting people to automatically go in the plan and think that’s the end of it. It does require a lot of work from the plan sponsor side, and it does require a lot of work from the recordkeeping/administrator side.”

Plan advisers should be wary of potential complications when designing their automatic features. Most retirement plan advisers are “looking at what makes the biggest impact in getting people in the plan,” Erickson says, which for Millennials may lead them to look at Roth options. “If you add a Roth feature to the plan,” he points out, Millennials that are in a lower tax bracket now can essentially “marginalize their tax hit by taking advantage of the tax-free distribution on the back end.”

Speaking for Millennials, Olson says, “We’re really the first generation that’s going to have to fund our own retirement, rather than relying on the typical defined benefit [DB] plan that’s losing popularity, and it can be really intimidating for people to hang onto enrollment packets for a year while you try to meet the eligibility requirements.”

…Advisers can help make an overwhelming amount of information more accessible for all participants, Olson says. “You want to be able to give that information to everybody but in a way that everyone has the opportunity to get through it and understand what it is,” she says. “Rather than a 15-page enrollment packet, maybe you pare it down to two pages, summarizing everything, but then give them the opportunity to look into it more later.”

Plan sponsors: How to keep employees on track for retirement readiness

Guanella-JayPeople get excited about technology. There are hundreds of websites chronicling the next big thing in technology, presenting information about how a device will save you time and money while providing entertainment. Getting people excited about or even acknowledging a retirement plan is much more complex. Over the years, there have been several new features created to help participants by increasing the flexibility of how they fund their retirements. Participant inertia is a large problem and directly relates to the usage of these new features.

As retirement plan professionals we believe having a solid retirement strategy is a no-brainer. For us, it’s a partnership with the plan sponsor that leads to great results by getting them involved and sharing responsibility of communicating and educating the participants. Human resource professionals have direct contact with employees and a great understanding of the best communication mediums and incentives that drive employees to take action.

There are several tools available for participants to project their retirement income. One of them, PlanAhead for Retirement®, enables participants to input additional income sources and variables to project their replacement incomes. Through the PlanAhead for Retirement tool, there is also a retirement readiness report that provides clients a view of the expected retirement outcomes of their participants on a plan level. The retirement readiness report displays where participants fall in relation to their projected replacement income at retirement. The report allows the client to change several variables such as the target of replacement income, return on investment, and changes to employer contributions. This is further broken out by age, service, and participant contribution rate. This interactive report helps the client make the leap from using current data such as participation rate and average deferral rate to projecting the results in the future.


At a plan sponsor level, using industry-related statistics on participation rate and average contribution rates we can show plan sponsors how they compare to their peers. Any deficiencies in the peer comparison are consulting opportunities. Using their participant demographic data, scenarios can be created to determine how changes to plan design (i.e., adding or increasing employer match) or targeting communication to specific participants encouraging them to take advantage of the benefit provided will improve results.

At an employee level, the medium of communication and the timing of the call to action are also paramount. Coordinating the retirement plan education and enrollment at the same time as other benefit enrollment periods has advantages as the employee is already completing paperwork. Showing an employee general information on plan demographics can also lead to an increase in participation and contribution rates via competition. Inertia is present in all retirement plans. What better way to promote change than to make it a competition, albeit an internal one.

Getting a plan sponsor to act on a retirement plan is just as important as getting the employees to act. As retirement plan professionals, we know that developing a partnership with sponsors can help lead to great results, keeping employees on track and taking steps to more successful retirements—using that flashy new technology that makes it easier for everyone.

Communication is key to achieving high take-up rates for pension lump-sum cash out programs

Bentz-JulieOne of the ways many organizations are reducing pension risk is by offering a lump-sum cash out opportunity, or “window,” to former employees. Successful cash outs can reduce participant-driven fees and future plan liabilities, as well as protect plan sponsors from unexpected plan costs. But without a high response rate, cash outs won’t deliver the desired results. That’s where communication comes in: successfully notifying and educating participants of their cash out options is key to achieving the highest possible response rate.

Generally, Milliman has seen that a program with an effective communication campaign can achieve take-up rates in the range of 50% to 60%. Consider these proven steps to communicate your lump-sum cash out option:

1. Plan for success. Determine how to get your communications into their mailboxes, literally. Do you have good addresses? How about email addresses? If not, how can they be found?

2. Make the message clear. Separate information from action to simplify the decision-making process and to ensure that participants aren’t overwhelmed with their options. Highlight what they need to know, what they need to do, and where they can find help along the way. Communication should be carefully presented as unbiased and understandable options.

Our lump-sum communication plan is supported by what the U.S. Government Accountability Office (GAO) reported regarding the eight key types of information participants should have for a sound understanding of a lump-sum offer. Your communication should answer the following questions:

• What benefit options are available?
• How was the lump sum calculated?
• What is the relative value of the lump sum versus the monthly annuity?
• What are the potential positive and negative ramifications of accepting the lump sum?
• What are the tax implications of accepting a lump sum?
• What is the role of the Pension Benefit Guaranty Corporation (PGBC) and what level of protection does the PGBC provide on each benefit option?
• What are the instructions for either accepting or rejecting the lump sum?
• Who can be contacted for more information or assistance?

An appealing design should complement a clear message. Design, layout, graphics, and colors are all factors that can make the difference between something that gets a response and something that gets ignored.

3. Reinforce the message. Don’t expect one mass mailing to do the job. Include multiple touch points to announce the window, educate about the opportunity, and provide reminders about the deadline.

4. Offer support. Be sure to consider where participants can go for help, whether that’s a call center, human resources (HR) department, or outside financial advisors. Then provide the service team with materials such as frequently asked questions (FAQs), communication samples, and training to prepare them to answer questions and support the initiative.

5. Go the extra mile. To boost the response rate, you may also want to consider additional touch points, such as:

• Webinars with overviews of pension benefits, discussions of lump sums versus annuities, and other considerations
• Letters for special situations, such as qualified domestic relations orders (QDROs), alternate payees, etc.
• Individual consultations with experienced retirement education specialists
• Group meetings to walk through the statement, form, and election process
• A website with personalized statements, online election capabilities, and daily reporting of response rates

Employee communications: Transition to a VAPP

tenBroek-HeidiRetirement plan sponsors are increasingly considering transitioning their current retirement plans to variable annuity pension plans (VAPPs). This allows them to have stable costs like those of a 401(k) plan, while providing participants with reliable, lifelong income like a traditional pension plan.

Communicating the change to a VAPP, however, may feel daunting for plan sponsors. Effective communications ensure that employees understand how the VAPP works, how it will affect them, and why a VAPP is a stable retirement solution for the sponsor and for them. Breaking down plan concepts into digestible, clear messages is key. Using a variety of communication vehicles—meetings, newsletters, personalized projections, etc.—increases the odds of success. In fact, we’ve found employees are excited about VAPPs once they understand how they work.

A short video created for employees can be one of your most powerful tools in communicating a new kind of benefit. The combination of images, written text, and oral explanations are very effective in conveying how a VAPP works. It provides a solid foundation and a basic understanding that makes the detailed communications to follow more accessible. Below is a sample video created as an introduction to a VAPP transition.

For more Milliman perspective on VAPPs, click here.

Milliman named top-10 investment site for mobile users

Milliman has been recognized as one of ThinkAdvisor’s “10 Best Investing Sites for Mobile Users,” in recognition of the excellent mobile site provided to defined contribution plan participants. The research, conducted by the Boston-based firm Dalbar, included 46 financial services company sites and considered 11 distinct evaluation categories.

“We are constantly working to innovate our mobile platform so that plan participants have the retirement information they need whenever they need it,” said Lance Burma, Milliman Employee Benefits Practice Director. “This recognition affirms several of our primary development priorities, including our emphasis on security and ease-of-use.”

To quote from the ThinkAdvisor analysis: “The defined contribution firm stood out in both security and navigation. A top score in that latter area means unobtrusive menus, ease in getting back to the home page, location clarity, balanced use of controls and logical placement of site elements.”

Milliman’s recent mobile site development priorities include updated menus, more flexibility for plan participants, improved charts and exhibits, and, coming soon, a text messaging option and login retrieval functionality.

For more information, click here.

Collaborative technologies require rethinking “dos and don’ts” for effective communication

Burma-CraigAs collaborative communication technologies improve, plan sponsors and Milliman colleagues continue adjusting business etiquette to best use these new instruments. Tools such as Microsoft LYNC,, and allow consultants to communicate remotely with plan sponsors to improve service, reduce cycle times, and ultimately reduce costs. However, these productivity gains were far from automatic when these technologies were first implemented.

The humorous YouTube video “A conference call in real life” struck a nerve with many early adopters who have shared similar experiences. The comedy demonstrates the challenges that collaborative communication technologies may present—system audio interruptions, technology incompatibilities, and ambient noise distractions (i.e., the barking dog). It doesn’t help that some of us have attention spans shorter than a child on cotton candy at a three-ring circus. Past the comedic relief, we realized achieving effective use of collaborative communication technologies requires further research.

A process improvement group studied Milliman’s use of collaborative communication technologies. We monitored meetings, collected observable data, and analyzed the results of more than 30 meetings. We were surprised to find the technologies worked fine; the business etiquette established for in-person meetings did not.

From our research, we edited our suggestions into 15 best practices for organizers and 15 best practices for attendees. Here they are:

15 organizer dos and don’ts

1. Don’t plan future sessions outside local business hours of any attendee.
2. Do become highly proficient in the technology before using it in a meeting.
3. Do join at least five minutes in advance to help people checking into the call.
4. Don’t troubleshoot tool issues in session; have a “phone only” option as a backup.
5. Do start on time by utilizing with whoever is there.
6. Do state session objective of the meeting within one minute and ask for concurrence.
7. Do take on-screen notes; open documents and annotate as needed.
8. Don’t take dictation; ask participants to instant message (IM) or email long content or updates.
9. Don’t assume silence as agreement; affirm key points by voice.
10. Do advise at five minutes remaining to “hard stop” session at time limit.
11. Do ask “any other items for today?” as a trial call close if session objective is achieved.
12. Do close by thanking everyone for their time.
13. Do summarize session outcomes in emailed notes.
14. Do show the date, time, and attendees on all notes.
15. Do email or post notes online within five minutes of session close.

15 attendees dos and don’ts (all apply to organizers as well)

1. Do read session objective four hours in advance; your mind will prepare itself.
2. Do have your computer and phone charged and in a quiet area.
3. Don’t use a speaker phone next to the keyboard you are typing on.
4. Do mention any nonobjective items at beginning—ask organizer to note.
5. Don’t be within earshot of a (possibly) barking dog or other audio intrusions.
6. Do actively use the mute button if no quiet place is available.
7. Do know when mute is on or off at all times.
8. Don’t listen for name to be called and then pay attention; it’s too late at that point.
9. Don’t put call on hold; everyone has on-hold music and we hear it.
10. Do say your first name and company in one-time sessions of multiple companies.
11. Don’t say your name each time you speak; we probably know your voice.
12. Don’t leave session before close; count on important items at end.
13. Do offer to take items off-line if a discussion is between two attendees only.
14. Do message or mention if you have to leave a call early.
15. Do continually assess session effectiveness and send feedback to organizer.

Milliman employee benefits consultants will continue to use collaborative communication technologies within their organizations and with plan sponsors. But as with the telephone, the fax machine, and email in their times, we will continue to update our “dos and don’ts” to make these interactions as seamless as if they were held in person. Adhering to these dos and don’ts will ensure time well spent for both organizers and attendees.

The end of SSA letter-forwarding service poses an obstacle for plan sponsors

The termination by the Social Security Administration (SSA) of its letter-forwarding service creates a hindrance for retirement plan sponsors. The service allowed sponsors to mail letters trying to locate missing participants regarding their benefits as required under ERISA.

In the latest issue of Milliman’s DB Digest, Alexandra Moen addresses the implications sponsors face in fulfilling their ERISA obligations. Here is an excerpt:

ERISA, IRS, SSA, and DOL regulations have consistently emphasized “reasonable methods” when attempting to locate participants. The SSA and IRS letter-forwarding services have historically provided fiduciaries great confidence that all appropriate steps had been taken. Free Internet search sites and social media can be unreliable and inaccurate. Are these methods “reasonable” if they fail to locate a participant? Several questions regarding these government agency announcements remain, but it seems certain that plan sponsors will now have to put more time, money, and effort into these required searches for plan participants and beneficiaries.

Many plan documents do not include wording about participants who are unable to be located. It is permissible to forfeit the benefit after all reasonable means have been exhausted, as long as the benefit would be reinstated if the participant makes a claim for it. Plan sponsors may also wish to consider adding wording to the Summary Plan Description or website telling the participant of their responsibility to inform the plan of address changes, especially if their benefit could be forfeited.

To read more DB Digest articles, click here.

The case for total rewards statements

Bentz-JulieAccording to the Center for American Progress (CAP), it costs nearly $10,000 to replace an employee earning $50,000. For upper management employees, the cost can be 10 to 20 times higher. Then consider the impact of the Patient Protection and Affordable Care Act (ACA) on employee retention. With health coverage available to all and preexisting conditions no longer applicable, employees have more freedom than ever to change jobs. This is why it is so critical to have effective employee retention and attraction strategies in place. One of those strategies is to effectively communicate the value of the benefits you offer via a total rewards statement.

Whether regularly produced in print or hosted online, this statement gives employees a snapshot of their total rewards packages and highlights the value of employer-paid benefits. Without these statements, employees are less likely to be aware of the full value you offer as an employer. This can potentially lead to low morale, dissatisfaction, and, at its worst, departure for an organization that appears to have a better benefits package or that pays an extra $5 per hour. Consider some of the following benefits as well.

Employee engagement. When you provide information about the investment you’re making in your employee through employer-sponsored benefits, you are also showing employees that you value them. Employees who feel valued are more engaged. And as you’re likely aware, the more engaged an employee is, the more committed he or she is to your organization. Online total rewards statements are particularly effective in driving engagement. They allow you to make regular content updates, such as quarterly commission payments, merit increases, or adding new hires throughout the year. In addition, employees can view archived statements and link directly to benefits providers for more information or to make changes in their benefits.

Cost reduction. A total rewards statement is an inexpensive way to interact with employees about their benefits. It makes providing information as simple as sending an employee a printed statement or accessing the information at the click of a mouse. Online statements can reduce costs even more because they eliminate printing and mailing costs that are associated with print-only statements.

Streamlined simplicity. You want your employees to know about the valuable benefits you offer, but expecting employees to proactively seek that information is simply not realistic. The total rewards statement allows you to streamline all this information in one regularly provided document or in one online destination. An effective statement visually demonstrates an employee’s personal total rewards package of compensation plus employer-paid benefits. Your employees may be surprised at how much their benefits add to their personal bottom lines. And that’s a powerful message.

With another open enrollment around the corner, new disclosures required under the ACA, and a competitive job market, your employees are likely paying closer attention to the benefits you offer. Now is the time to beef up your benefit communication efforts and make certain that your employees understand their options and the actual costs.

Google+ Hangout: Milliman mobile benefits app (Part II)

Employers can revolutionize the relationship between retirement plans and plan participants using the Milliman mobile benefits app. The app is designed to address employee engagement from a behavioral standpoint.

In this Milliman Hangout, Craig Burma discusses the app’s upcoming functionality and transaction enhancements to further boost employee engagement. For more information on the Milliman mobile benefits app, click here.

Burma provides an overview of the mobile app technology in this previous hangout.

Google+ Hangout: Milliman mobile benefits app

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.