Category Archives: Communications

Communicating a defined benefit plan conversion

Milliman consultants assisted one particular multiemployer defined benefit plan’s transition to a stabilized Milliman Sustainable Income Plan™ (SIP), formerly known as the variable annuity pension plan (VAPP). The conversion required a communication strategy conveying the new plan’s design to participants. In this article, Jessica Gonchar describes how the firm implemented an employee communications campaign explaining the basic principles of a SIP and how it differs from the prior plan.

Milliman Hangout: Milliman Actuarial Retirement Calculator™ (MARC™)

The Milliman Actuarial Retirement Calculator (MARC) is a pension administration and communication tool for pension plan sponsors. The system offers data storage, benefit calculation, correspondence management, a participant website, and more.

In this video, Milliman’s Kevin Hicks explains some of MARC’s benefits. He also showcases MARC’s participant website.

To learn more about MARC, click here.

Central States ruling highlights the importance of communication

tenBroek_HeidiOn May 6, the U.S. Department of the Treasury denied the application of the Central States, Southeast and Southwest Areas (Central States) pension plan for benefit suspensions. According to Treasury, the plan’s proposal was fundamentally flawed in three ways. The first two reasons Treasury gave were that the proposed benefit suspensions were “not reasonably estimated to allow the plan to avoid insolvency” and were “not equitably distributed” (the plan did not explain to Treasury’s satisfaction the variations in the treatment of different classes of participants).

Poor communication is the third way the plan’s proposal failed to satisfy the requirements. According to Treasury, the plan’s notices to participants were “not written in a manner so as to be understood by the average plan participant.” Treasury explains:

• “The notices extensively use technical language without adequate explanation”
• “Critical terms used in the notices are not defined in the notices but only by cross-reference to other documents (e.g., the plan document and the rehabilitation plan document)”
• “The cross-referenced definitions in those other documents are not understandable to the average plan participant”

Few pension plans are getting the kind of attention that’s being paid to Central States. But many plans looking to the possibility of benefit suspensions in the future can take this opportunity to learn from Treasury’s issues with Central States’s application. Remember that good participant communications need to be included in your calculations.

For more perspective, read Tim Connor’s article “Central States Pension Plan and the Multiemployer Pension Reform Act.”

Five ways to motivate Millennial action through employee communication

Gonchar-JessicaI know what you’re thinking: “Ugh, not another Millennial article.” But stay with me for a minute. As a Millennial myself, I have some insight on this generation.

Everyone knows that Millennials work differently than other generations, but actually motivating us to do something can be difficult, especially if you use the same communication you’ve always used. We are constantly bombarded with information from social media, texting, and friends, all of which compete for our limited time, so a long email about benefit changes likely won’t make the cut.

We now comprise over one-third of the workforce and are projected to be a majority by 2020, so it’s more essential than ever to understand what motivates us.

Whether you want to encourage us to enroll in a high-deductible health plan, contribute more to our 401(k) plans, or just get your message through the noise, here are five easy communication techniques you can use to motivate even the most indifferent Millennials.

1. Personalize it
Generic communication, as simple and cost-effective as it may be, is not the most effective way to get through to any employee, let alone Millennials. But personalized information is valuable information. A brochure touting the importance of contributing 1% to a retirement plan is not as powerful as a postcard projecting how much money I could save if I increased my 401(k) contributions by 1%.

2. Make it convenient
Making things quick and easy is key to getting through to my generation. For example, conveniences such as single sign-on and embedded links make a low-priority task like updating an address effortless and more likely to happen.

3. Go mobile
It’s no secret that we love our phones. Mobile communication provides a handy platform where information tends to be read within three minutes of delivery. Mobile communication also lets us access information where and when we want it, and supports real-time updates. Not everyone wants work notifications on their phone, but providing the option allows us more choice in the type of communication we want and increases the likelihood we’ll read it.

4. Keep it compelling
Another way to break through the noise is to make your message compelling and relevant. Remember, you’re competing against technology that is exceptionally good at monopolizing our attention. Emphasize why the communication is relevant to us. Is there a cash incentive for taking an employee survey? Will this program benefit our health in the long run?

5. Tell a story
Stories can be a powerful communication tool to engage and connect with the reader. Instead of sending an email that simply lists the benefits of enrolling in a flexible spending account, tell a story of an employee who has used the account with specific examples of what can be purchased pretax and how it saved her money.

It’s clear that Millennials want and need communication that is personalized, convenient, and mobile-friendly so we can engage with it when and where we want, compelling so we know why it’s important, and formatted in an interesting way. Using these five principles can help ensure you reach your ever growing Millennial workforce.

Want to read more? Check out this article on communicating across all of the generations in the workplace.

Milliman’s HR Communication Practice wins 2016 Graphis, 2015 Marcom, and 2015 HOW In-House Design Awards

Milliman today announced that it was recently honored with the following international communication awards:

• “The Key Ingredient” Red Robin Non-Saver Campaign: 2015 Marcom Platinum Award, Graphis 2016 Merit Award, 2015 HOW In-House Design Merit Award
• “The Importance of Diversification – PlanAhead for Retirement”: 2015 Marcom Gold Award
• “Get A Tax Break” motion graphic video: 2015 Marcom Award
• “Happy Holidays” e-card: Graphis 2016 Merit Award, 2015 Marcom Award

The winning materials were created by the Dallas-based team of senior communication consultants, writers, graphic designers, and web experts. Milliman delivers award-winning communication services to millions of employees across the United States. Services range from videos, interactive modelers, and websites to meeting services, print, and mobile.

Our clients hire us to make their messages clear to their employees, to cut through the clutter, to change attitudes, and to drive behavior change. Individual client results and statistics confirm the success of our ongoing work, but these awards are especially meaningful because they validate the level of excellence we bring to our clients from an international perspective.

For more information about Graphis, Marcom, and HOW awards, visit: http://marcomawards.com, http://www.howdesign.com/design-competitions/inhouse-design-awards, and http://www.graphis.com/awards.

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.

PlanAhead_exhibit_1

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-HeidiThe Variable Annuity Pension Plan (VAPP) is now the Milliman Sustainable Income PlanTM (SIP).

Retirement 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.