Millions of visitors flock to Niagara Falls each year to see one of the world’s greatest natural attractions, and to tempt Lady Luck at Casino Niagara and Fallsview Casino Resort. But Niagara Casinos’ executive team wanted to ensure that luck had nothing to do with securing a strong financial future for its employees. A review of the employees’ DC pension plan in August 2011 showed that significant changes were needed to achieve that goal.
“I was alarmed that we had a lot of people in our default—a money market fund—earning less than 2% interest,” explains Colleen Falco, Niagara Casinos’ director of HR services. The default fund represented 14% of the organization’s total plan assets—just over $17 million.
“We needed a better default option.” So Falco—with the support of Maria Graham, vice-president of HR, and Kevin Wilson, chief financial officer—implemented target date funds (TDFs) as the new default option for new hires. Existing plan members, on the other hand, were not forced out of the money market fund. Instead, Falco and her team opted to put existing members through a mandatory re-enrollment process, which would give them a chance to look at their current investments and consider the TDFs.
Coming to the table
Niagara Casinos created a fun multi-layered strategy to get members excited about re-enrollment. The theme of the campaign was Rock Your Retirement, a play on the Sun Life Financial Granite series of TDFs that were introduced. It launched with a direct-mail campaign from Art Frank, Niagara Casinos’ president, to introduce the new funds. Other communication tools included themed 3-D postcards inviting members to attend a session and enter a draw to win a BlackBerry PlayBook, and an engaging video explaining TDF rates of return and how these funds change over time to match the retirement horizon. Interactive materials were also posted on the company intranet, and the company offered voluntary information sessions on TDFs.
Falco says Niagara Casinos also worked with Sun Life to hold different education sessions focused on the plan and the reasons for the re-enrollment initiative. Members used BlackBerry PlayBook tablets during the sessions to complete their re-enrollment, allowing them to re-enrol as they were thinking about the plan, rather than at a later date.
The promotion and education was done in three phases. “When you’re training that many folks, and it’s a 24/7 operation, it wasn’t something we could push through in a month or two,” says Falco.
Phase 1, in January and February 2012, focused on getting executives, directors and those in management roles onside. Phase 2 targeted the large group of defaulters—those who were fully or partially invested in the money market fund. Falco said that she and her team stressed to those members that if they continued along the path they were in, they were not going to have enough money to retire. Phase 3 centred around the rest of the organization’s employees, “who have managed their portfolios but maybe not as actively as we would like.”
Falco says Niagara Casinos has been encouraged by the results of its outreach. The percentage of plan members who were partially invested in the money market fund dropped from 42% in January (before the education sessions) to just 22% by June. And of that 22%, more than 90% had less than 40% of their assets left in the money market fund.
And the percentage of members whose plan assets were fully invested in the money market fund fell from 20% in January to 4.7% in June—decreasing from 678 members to 188. By the end of June, 29% of plan members were at least partially invested in the TDFs, totalling just over $42 million in assets.
Falco says that, although the primary goal of the initiative was getting members more engaged in their plan and into funds that better suited their savings needs, the organization saw some additional benefits around demographics. Prior to the initiative, Niagara Casinos identified a number of employees age 45-plus who were overinvested in equities. Following the mandatory training and re-enrollment, that group’s total amount of investments in equities decreased by 14%.
The education and re-enrollment sessions had a 92% attendance rate. Of the no-shows, 5% (152 employees) were on leave from the company. For the remaining 3%, Niagara Casinos reduced its own risk by documenting its engage-ment efforts. At the end of the sessions in June, it sent these employees a memo outlining the six months of training sessions and the effort made to schedule them to attend, and the multiple communications sent outlining members’ responsibilities.
A winning hand
Falco says the organization’s success with the re-enrollment initiative was thanks to its focus on making the education fun and easy to understand. The team also made plan members aware that, while the process of plan re-enrollment was mandatory, making a fund change wasn’t, and that employees should decide what worked for them based on their investing style: self-monitored or delegated.
“We weren’t saying, ‘We want you to go into the target date fund.’ We were saying, ‘You have two big options here: you can use a pre-built asset that will rebalance as your timeline to retirement changes throughout your lifetime, or you can continue to monitor and make changes as life events happen and as it suits your style or your needs at the time.’” (Employees can also opt in and out of the different funds at any point in time as their preferred investment style changes.)
Falco adds that the organization’s emphasis on building the outreach around employees’ lives and workloads also helped motivate plan members to pay attention to the key messages. Financial advisors from Sun Life were on-site at Niagara Casinos’ two facilities each week from January to June so employees could pre-book appointments or simply drop in as their schedules allowed. In total, 329 out of almost 3,800 plan members attended on-site meetings with an advisor.
Falco says there were a few skeptics at the start of the re-enrollment sessions, asking what was in it for Niagara Casinos. She explains that Sun Life’s advisors helped these members understand that there was no incentive for the organization outside of ensuring its employees were prepared for retirement. “They were saying, ‘You should be taking advantage of this. You’re being given an hour of paid time to look at your retirement future.’”
While Falco says the company’s culture around retirement has changed somewhat following the initiative, she admits that pensions remain somewhat complex and scary for many employees. But just as it takes a few hands of poker to understand the game, she’s confident Niagara Casinos’ newly educated employees will continue to strengthen their knowledge of retirement planning. “What we’ve started is an awareness of financial literacy, and we’ll continue to build on it. Hopefully, we’ll have some very savvy retirees by the time [their retirement] comes around.”
Brooke Smith is managing editor of Benefits Canada. brooke.smith@rci.rogers.com