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.

Administering and communicating pension plans has always been a puzzle. Utilizing in-house administration systems for pension calculations can be time-consuming and unreliable. However, the Milliman Actuarial Retirement Calculator (MARC™) is a robust pension administration system and an overall retirement program communication system.

This video discusses how MARC™ can streamline final benefit calculations, prepare election forms and notices, produce annual benefit statements, create pension estimates, and provide actuarial valuation data.

To learn more about Milliman’s pension administration system, click here.

With the W-2 reporting requirement to disclose the amount both employee and employer spend on healthcare costs beginning in January 2013, as well as recent fee disclosure requirements for defined contribution plans, benefit cost information for employees is becoming more and more accessible and transparent. Yet, in a time when 40% of employees don’t know the cost of their health insurance (LIMRA, 2011), it begs the question: Are companies doing enough to take advantage of a consistent and deliberate communications strategy?

With customized tools, such as Total Reward Statements, organizations are able to present benefit information beyond the requirements for W-2 reporting, and weave together a sum of all total reward parts—how pay, rewards, and recognition, traditional and nontraditional benefits alike (such as flex time), support each employee. Personalized messages can be targeted to specific groups within a company, such as employee types (field, management, administration, executive), generational types (Gen X, Gen Y, Baby Boomers), or locations, or to employees who don’t participate in the defined contribution plan or the wellness plan. Milliman’s employee communication consultants find that organizations have stronger control over total compensation costs, as well as more flexibility to respond to changes in the market and within the organization itself, after implementation of total compensation strategies.

These strategies increase an employee’s access to more relevant and personalized information. They also act as a potential tool to attract, retain, and motivate employees, which couldn’t be more timely for human resources departments. Recently, attendees and panelists at Milliman’s 2012 Compensation Breakfast in Seattle shared that retention of key employees remains one of their biggest challenges, if not indeed their biggest. A strategy of total compensation will help current employees see the value that not only includes total pay, but also being part of an organization’s mission, goals, values, and culture.

Denise Foster, Sharon Stocker, and Heidi tenBroek highlight circumstances when their employer-to-employee communication strategies can help prevent misunderstandings.

Here is an excerpt from their article on effective employee communication:

Communicating difficult or sensitive changes
Clients often seek out the experience and expertise of Milliman’s growing communication consulting team when they are making difficult decisions that result in a negative impact (for example, benefits reduction) or that present additional challenges for employees (such as a new tool or system). We help employers explain why they are making changes—without obscuring the truth.

Sharing good news
Effective communication matters even when an employer is improving its benefits package. One client—without our help—introduced an improvement to their benefits plan. Years later, many employees still think negatively about the change because the communication wasn’t clear. Good communication is especially important when there’s a lack of trust—in such an environment, employees are more likely to create their own version of what happened.

When “nothing changes”
Sometimes a client will change medical carriers and the employer wants to say they are not changing the benefits. But different carriers administer plans differently with real-world consequences for employees. We know the questions to ask and can help employers figure out all the smaller but important changes that may affect their employees, or, if those details are unknown, advise them on how to best communicate with employees that there may be some differences between the two plans.

In addition, what may seem like a minor change to an employer can be perceived as a major change by the employee. For instance, when you’re converting a vacation/sick leave program to a PTO program, it’s important to communicate all transition details. Is it clear what’s happening with the sick bank an employee has saved up? In such a situation, it’s best to create a personalized piece: Here’s what you have and where it goes.

To read the entire article, click here.

Communicating is key to the success of any business. This new article by Milliman consultants Denise Foster, Sharon Stocker, and Heidi tenBroek offers employers strategies for sharing important information with employees.

This excerpt outlines five best practices:

1. Plan before you launch. Before you get started, define objectives, identify key stakeholders, and create a strategy and plan of action.

2. Don’t sugarcoat bad news. Employees see through and resent attempts at hiding benefit changes that can be perceived negatively.

3. Stick to your message. Determine key messages at the beginning and communicate them consistently.

4. Make sure the managers and supervisors are on board. This is an underestimated group—they have influence over employees and can be advocates or barriers depending on how you treat them.

5. Rinse and repeat. Reinforce key messages multiple times and across a variety of media in a coordinated way to avoid overwhelming the intended audience. People are affected differently by different formats and messages need time to sink in.

Individuals who don’t save for retirement can be divided into three groups: those who don’t know they should, those who are unwilling (they know they should but don’t), and those who don’t have the means (they know they should but can’t). A plan sponsor likely has all three of these groups within its organization; each presents some unique challenges, but the first two groups would clearly benefit from an effective financial literacy program.

Don’t know
It’s a simple and sad fact that some people don’t understand how important it is to save for their futures—these are the truly financially uninformed. Perhaps they were never exposed to the concept of saving; or their parents didn’t save or emphasize its importance. Where else would they pick this up? In North America, it’s rarely taught in school. Lacking knowledge and awareness, they live in the moment and are surprised to find they’re unprepared for the future.

Unwilling
More puzzling is the group of individuals who don’t save for retirement when, at a basic level, they know they should. Why would someone saving hard for retirement take an ill-advised loan from the account to pay for a new truck? Perhaps the following starts to explain some of this seemingly irrational behavior.

• The concept of a comfortable retirement is too nebulous and distant to motivate people to save. Instant gratification is the name of the game. Why wait when you can have it now?
• Denial dominates the thinking. If subsisting on Social Security or a meager public pension is the consequence, it doesn’t seem real for individuals as they continue to enjoy a prosperous and bountiful lifestyle.
• Information overload can lead to inaction. An overabundance of information can make it hard to filter out what’s important. People can reach the point of saturation and simply become paralyzed.
• Choice costs time. When faced with too many choices, it can be overwhelming to wade through them. The more choice, the more effort—and people will often choose the path of least resistance, which is to do nothing at all.

 
No means
Critical needs can compete for resources. When a person is struggling to put food on the table every day, how is it possible to set money aside for the future? Sadly, given the economic downturn, more and more people are in this situation across the globe.

During a panel discussion on “Client Facing Technologies” at SunGard’s Annual Users’ Conference in Florida, I was asked: 

How does Milliman find it needs to communicate to its customers and what types of technology do you consider crucial to implement to address these communications?

My response is below.

I believe users “logging in” to Milliman websites will decline rapidly in the coming year. In the past, declining logins would be a troubling sign for a technology professional. Now it is the goal. 

That’s because secure and safe access to this information is becoming available through Milliman’s Secure Access Channels such as:

1. Mobile applications downloadable on Android and iPhone/iPad devices
2. HTML5 mobile sites using smart phone login credentials
3. Single Sign-On (SSO) with client networks using Secured Access Markup Language (SAML)
4. One-click email decisions such as “go paperless” that participants elect to do directly from their email message
5. Pass-through logins accepted from “keymakers” like Facebook and OpenID.

Each Secure Access Channel breaks down the user name and password “barrier” created by participant websites and increases participant interactions with their employee benefits.

Milliman works with SunGard and other companies to assemble functionality, bandwidth, and access to secure information contained within our record-keeping systems while maintaining the same high standards of the Reporting on Controls at a Service Organization – SSAE No. 16.

Secure Access Channels are strategically important for Milliman. Together they change communication patterns in the same kinds of ways that interactive voice response (IVR) changed paper forms and websites changed IVR.

Finding the right “mix” of technology and business process improvement in each medium, and adjusting over time, will be the subject of my next post.

Certain plan sponsors and administrators are permitted to use electronic media to furnish information about the plan’s fees to participants. The Department of Labor has issued guidance on such communication. This Client Action Bulletin digs into the details.

On May 16, 2011, the Supreme Court affirmed unanimously that the Summary  Plan Description (SPD) can not be used to support claims of participant plaintiffs when suing for harm due to a misleading  SPD (Cigna vs. Amara). The only presiding document is the official plan document. If you follow the legislative world closely, this is a big deal.

But is it really? Every SPD I have ever written has included the warning: “In the case of a discrepancy between the SPD and the plan documents, the plan documents prevail.” It’s always been about the plan documents “governing.”

So will this ruling change anything? I would argue no. Companies will continue to write SPDs and worry about their accuracy for the same reason they always have—not just because it’s required but because it makes good sense. It’s sometimes the employees’ best chance at understanding their benefits. It translates the ever-accurate legalese into something my mother can understand. Well-written SPDs make a reader say, “Oh, NOW I get it,” which is finally the point when they see that the benefit is worth something. You don’t value what you don’t understand. The ultimate goal will always be what it has been for most responsible companies, making sure employees understand the benefits their companies invest in so deeply.

We’ll see if the ruling really does affect how companies approach SPDs.

In any case, plan sponsors can make the most of their benefit dollar by writing SPDs and writing them well; it matters to employees and family members.

Pension plans may be one of the best kept secrets of employers. It’s not a surprise when you think about it. Employees don’t interact with this benefit much during their careers. For years, employers have given pension plan information to new hires via an orientation packet, which has typically been a ream of paper containing an overwhelming amount of information.

While small changes may have been made, the changes themselves usually haven’t resulted in a significant communication campaign and so employers are silent … and employees are unaware. If employees know they have this benefit, in most cases they don’t understand the value or how it works. What kind of benefit is this?

For many years, I’ve seen clients spend significant money (certainly more lately) to maintain a healthy pension plan and spend little to nothing to see that people understand and appreciate the effort. Go figure.

Effective pension plan communication can start with something as simple as providing a better explanation with required notices. If participants don’t understand the information, in this economy particularly, they will imagine the worst. If it isn’t good news, employers should be straight with their employees about what’s happening, and why and how they’re affected. If you have a pension plan weathering the storm, explain how the benefit works, define unfamiliar terms, share an example, and demonstrate the value. Show how the pension plan fits into the overall benefit strategy by providing a total compensation or total reward statement. Just don’t keep one of your most valuable benefits a secret!