|
One of the key
issues facing the defined contribution (DC) industry today
is whether plan members are sufficiently educated to
assume the investment risk of their defined contribution pension
plans.
Currently, pension
regulations do not provide clear guidelines or recommended practices
for plan sponsors on how to educate their DC plan members. But
plan sponsors have a responsibility to ensure that plan members
fully understand the details of the plan and are equipped to take
responsibility for their own investment decisions.
The fear of liability
associated with this fiduciary responsibility is a major concern
for plan sponsors. “No one really knows how serious the legal
risk is to plan sponsors”, says Mary De Paoli, vice president,
National Sales and Marketing, Sun Life Financial and author of The
New Imperative: The Pension Plan Sponsor’s Guide to Successful
Employee Communication and Education. "It’s difficult
to quantify liability since it's never been tested as to whether
it’s large or small. But no one should wait for a banner case
before implementing a plan for educating DC plan members,”
she says. “Plan sponsors should also document everything they
do to provide a historical paper trail as proof that they took as
many reasonable precautions as possible to educate their plan members."
Attention
plan members
One of the greatest challenges with even the most comprehensive
communication plan is getting through to all
plan members. Plan sponsors who have committed significant resources,
dollars and time are seeing evidence that their message is not getting
through. Does your plan have
low attendance at education or enrollment meetings; a high percentage
of plan members in the default fund; and/or a high percentage of
younger plan members in GICs? This
could be an indication that your communication is not hitting the
mark.
What do you think are factors that contribute to employees’
apparent lack of interest in their DC plan? It may be attributed
to the age of the employees— employees are young and feel that
retirement is too far away to take seriously; or, they may be overwhelmed
by the information. Have you considered that a lack of reading and/or
numerical literacy skills may actually be at the root of the apathetic
response?
"Generally, as Canadians, we don't have the infrastructure
to promote investment learning through schools or adult education
centres," says De Paoli. "People know how to plan for
a vacation, but they don't know how much to save for retirement.
It's not seen as a life skill."
There is hope
Plan sponsors can encourage even the "unreachables" to
participate and learn what they need to know about their DC plan.
Here are some suggestions to keep in mind when designing and implementing
an education and communication plan so that you reach everyone:
>
Know your audience
To be most effective, the communication plan should
be based on a clear understanding of who the plan members are (demographics)
and what their needs are. It's important to remember that a group
is made up of individuals with varying levels of investment knowledge.
Each plan member may have different attitudes towards and understanding
of risk and return as it relates to their own individual retirement
goals. For those with poor literacy skills and for a multi-lingual
workforce, it's important to offer basic communication, and to consider
the cost of multiple translated versions of the communication material.
How well do you know
your plan members? Have you conducted employee polls or surveys
that can help you capture this information? It might be worthwhile.
>
Empower the
audience by including them in the design process
Plan members can provide valuable insights into the content that
appears in booklets, corporate Intranet sites and other forms of
communication. They may also have ideas for implementing plan enrollment
presentations to peers, and can contribute by helping to plan or
review communication material. Have you set up an employee work
group to help develop this material?
>
Timing, location
and co-ordination
Timing of meetings,
locations and co-ordination of schedules are obvious considerations.
For example, traditional “town hall” meetings may not
work for shift workers, mobile sales forces or employees in remote
locations. The needs of these plan members can be addressed through
access to the Internet, the availability of teleconferencing facilities
and the option of one-on-one financial planning.
>
Offer a communication plan in
different stages to meet the needs of different audience segments
Don't hang the
success of your communication plan on only one communication piece.
Build interest and knowledge by developing a strategy that has multiple
communication pieces. Using a variety of media to communicate information—the
Internet, e-mail, paper and face-to-face informational or counseling
sessions will also address the different ways people like to receive
information. Does your communication program utilize multiple mediums,
frequently, over time?
>
Cut through
everyday noise
Ever feel like
you’re bombarded with information on a daily basis? So do your
employees. Make your communication to them innovative and entertaining
to ensure it's noticed: create a theme, hold a memorable kick-off
with a reception or gift, organize a contest or a draw for a prize,
or set up special interactive kiosks.
>
Measure the effectiveness of the campaign to find
out what works and what doesn't at each stage—this will help
in the next communication effort
Remember that any
communication plan is an ongoing process, which must be dynamic
and continually modified. How will you know if you reached the “unreachables”?
Establish benchmarking criteria to measure your success.
Although specific rules
and regulations regarding the required amount of plan member education
do not exist, the fear of liability does. And whether plan sponsors
embark on a full out communication journey in order to address this
fear or to simply ensure that employees understand and appreciate
the benefits they offer, it’s clear that a well thought out,
measurable, and strategic communication and education plan is the
best course of action.
Knowing the audience—all
of the audiences—which comprise an employee base, will contribute
significantly to the planning, logistics, media and success of any
employee communication program. Evolving and adapting communication
strategies on a regular basis will ensure your efforts are part
of an ongoing process, not just a one-time project.
|
News
News
