Tag Archives: employee education

Boost employee engagement during periods of layoffs

Employment research repeatedly shows that employee engagement typically decreases as unemployment increases. Greater demands on a reduced workforce can sap morale and adversely affect production.

Employers must approach layoffs in ways that mitigate risks to employee engagement and performance. In a recent Forbes article entitled, “The Paradox of Layoffs: Engagement drops when you need it most,” Milliman’s Radhika Philip highlighted five ideas that can help organizations.

Celebrating National 401(k) Day can generate enthusiasm for retirement plan

Many employers hold benefits fairs during open enrollment, providing employees an opportunity to review all benefits offered to them. Focusing on the 401(k) plan only during open enrollment events can give employees the false impression that they must make their 401(k) decisions only during the open enrollment period. This article explains how Milliman helped one employer highlight its 401(k) benefits by engaging employees in the process more effectively.

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 Sustainable Income Plan

tenBroek-HeidiRetirement plan sponsors are increasingly considering transitioning their current retirement plans to the Milliman Sustainable Income Plan™ (SIP). 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 SIP, however, may feel daunting for plan sponsors. Effective communications ensure that employees understand how the SIP works, how it will affect them, and why a SIP 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 SIPs 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 SIP 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 SIP transition.

Note that the Milliman Sustainable Income Plan™ (SIP) was called a Variable Annuity Pension Plan (VAPP) at the time this video was produced.

For more Milliman perspective on SIP, click here.

Mandatory retirement savings in the United States? Why not?

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.


(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)

When effective employee communication matters most

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.