Employee benefits are like taxes: complex, personal and ever changing due to state and federal government regulations and the arrival of new benefit products in the marketplace. Just when employers thought they had benefits matters under control, President Bush signed the Pension Protection Act into law.

PPA, enacted this summer, contains the most significant changes in pension legislation to come along since the Employee Retirement Income Security Act was passed in 1974. It redefines important provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001.

The challenge for employers arising out of all this legislative ferment is finding simple, fast methods to explain these changes to employees. The list of plans affected by the new act include: hybrid pension plans (including cash balance plans), multi-employer defined benefit pension plans, nonqualified deferred compensation benefits, increased retirement plan limits; defined contribution plans, flexible spending accounts, 401(k)s, and health plans in a variety of models.

In 2005, employers were spending almost 29.8% of their total compensation budgets on benefits, up from 28.2% in 1991. Improving employees’ “benefits literacy” is critical during this time of rising benefits expenditures.

Communication Counts

In the information flow from employer to employee, methods of benefits communication are critical. How you package communications about your benefits program has a big impact on employee perceptions of the program itself.

A 2005/2006 Watson Wyatt Communication ROI Study, found that communication effectiveness is a leading indicator of financial performance in a company and that firms who successfully communicate with their employees are less likely to have adverse organizational turnover and 4.5 times more likely to report high levels of employee engagement than those firms whose employee communications programs are lacking.

However, many employees are not aware of the true cost plan sponsors and employers spend on their benefits. Communicating this information can help them understand the financial commitment made on their behalf. Conveying benefits data successfully is necessary for:

–Positively influencing the corporate culture overall.

–Building organizational trust.

–Educating and shaping the behavior of benefits users in utilizing benefits.

–Creating value through benefits communications.

–Reinforcing an organization’s branding vision.

Teaching benefits literacy

Employers can demonstrate the importance of benefits and garner appreciation among plan participants by sharing key data on the cost of benefits and changes in plan terms and provisions. This gives employees a clearer picture of the true value of their compensation package and a better understanding of how to manage their benefits.

Yet benefits managers often lack a strategic plan and the tools for producing and explaining such important information.

While there is no substitute for the one-on-one HR dialogue, the printed brochure and the benefits poster outside the HR department are no longer relevant methods of getting the benefits message across.

To simplify the complexities of employee benefits management, many employers and HR directors now rely on online learning. However, e-learning tools can make a big demand on employees’ time. (Traditional online programs run about 30 minutes and some of them can run for hours.) Most programs are not presented in formats that have any staying power and many lack a sense of good information design.

Employees receive hundreds of messages every day, so programs that are easy to assimilate have time-saving features yet encourage deeper inquiry and continuous learning have an important role to play in “benefits literacy.” (See sidebar.)

As companies seek better financial organization and administrative control of their pension plans in the future, it’s more than likely employees will have increasing autonomy over the control of their benefits allocations and plan selections. Innovative approaches and learning tools will lead the way in tailored and engaging online programs for specific employee audiences to keep current with new plan designs, provide a resource for employers to stay in step with legislative developments, and for HR departments to implement their benefits programs with more ease and facility.