It affects many organizations, but is seldom viewed as a major issue—and rarely mentioned in the context of pensions and benefits. The reality is, however, that many employees lack the literacy skills needed to read and absorb information about their pension and benefits plans. Sure, they may be equipped to handle the written materials required to do their jobs, but when it comes to dealing with new subject matter—especially financial and health information—their literacy skills are simply not up to the task.
While this isn’t the case in all work environments, a comprehensive study released last year by the Canadian Council on Learning found that the problem of low-literacy levels is much broader and deeper than most of us would like to admit. If you’re frustrated by your employees’ apparent lack of engagement in the pension and benefit plans you offer, you might want to start with a realistic assessment of not just their financial literacy, but their basic literacy skills.
Startling statistics
Keep in mind that there is a big difference between “illiteracy” and “low-literacy.” Only a small number of Canadians are truly illiterate. However, a significant number are lacking adequate skills to cope with life in an advanced society.
For example, below are two common myths about literacy in Canada, courtesy of the Canadian Council on Learning (CCL).
Myth: Canada does not have a literacy problem.
Fact: Almost half of all Canadian adults (48%) have low literacy skills.
Myth: Adult literacy in Canada will improve over time as more people acquire higher education.
Fact: The proportion of Canadian adults with low literacy skills will remain virtually unchanged through 2031.
What does low-literacy look like? Here are more findings from the CCL’s study Reading the Future: Planning to meet Canada’s future literacy needs:
• Most adults with reading problems believe that their skills are “adequate” for their work.
• Many have not completed high school, although some low-literates have gone on to post-secondary education and may even have university degrees.
• A large proportion of them are employed.
• Depending on their degree of literacy, many have a negative attitude toward computers.
• Despite being below the international standard for functioning effectively in a modern society, most low-literates are relatively close to achieving that standard.
Who’s most likely to be affected? Not surprisingly, two of the most widely affected segments of the population are seniors and immigrants. But, another significant group is younger, English-speaking males born in Canada. While their literacy skills tend to be better than those of seniors or immigrants, they may have very limited print and vocabulary skills, as well as poor spelling ability. Their vocabulary can support very basic day-to-day interactions with print such as grocery shopping or watching television – and most have a positive attitude toward computer use—but their poor literacy skills make it hard to conquer challenges such as dealing with complex pension and benefit information.
What plan sponsors can do
Plan sponsors can begin by accepting the fact that literacy may be an issue for their plan members. The next step is to assess the extent of the problem. Clearly, this needs to be handled with sensitivity and confidentiality—and may involve bringing in outside experts to assist with the research. Finally, depending on the results of this analysis, plan sponsors need to be prepared to make some significant changes, not only in terms of how they communicate with plan members, but possibly in the plan design itself.