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Retirement Planning > Retirement Investing

Revitalizing Retirement Plan Participation: Ways to Motivate Today’s Savers

By Chuck Cornelio

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In today’s economy, encouraging participants to stay enrolled in their plans and to set aside a portion of their pay is not an easy task. Communication and education strategies that may have worked in the past are no longer enough, and plan sponsors have turned to more creative ways to engage employees to enroll, contribute and stay invested.

In fact, due to economic uncertainty and common misconceptions about employer-sponsored savings plans, participants are making costly mistakes while saving, including discontinuing contributions, borrowing from their account balances, or taking lump sum distributions (minus taxes and penalties) when they leave a job. A recent study[1] of baby boomers indicates that a third stopped contributing to their 401(k) or IRA accounts in light of the recent recession. Many of these boomers are now putting off their retirement plans.

“Tried and True” Pathways to Participant Motivation

Plan sponsors have traditionally turned to a number of tactics to spark motivation among employees. Many of these proven strategies have stood the test of time and should continue to be used by sponsors to reach participants and educate them on the value of their employer-sponsored plans. Some of these include:

  • Benefit Fairs—A comprehensive employee benefits package featuring a retirement plan and other attractive benefits can serve as a strong retention tool for employers. Hosting a benefit fair is a great way to educate employees on the full range of benefits your company has to offer – many of which may be unknown to or underutilized by employees.
  • One-on-One Meetings—Taking the time to meet with employees in a private setting is a great way to personalize education on employer-sponsored plans and answer questions people are often reluctant to ask in group settings.
  • Annual Enrollment – The period of time when employees can make changes to their elected benefits is an ideal time to communicate the value of participating in a 401(k) or other employer-sponsored retirement plan.

Five New Ways to Boost Participation

Plan providers are also sharing newer strategies to help plan sponsors increase participation and motivate employees to take action. Many of these non-traditional communication and education channels are aimed at engaging participants in ways they prefer to be reached. Here are five new ways to motivate action among employees saving for retirement.

1)      Engage through Multi-media – Hosting a video presentation or interactive webinar to help employees understand their 401(k) statements can help answer questions and decipher complicated provider materials in an interactive way. These forums allow participants to submit questions and receive answers in real time.

2)      Promote Social Media – Sponsors might consider building a retirement planning community through social media to spark retirement conversations and help employees gather advice from peers they trust. By offering an online forum, you demonstrate that you are in touch with the communications preferences of today’s savers and reaching them in ways that are most convenient to them.

3)      Tap Into the Full Range of Provider Resources – Explore all the communication and education resources your plan provider has to offer. They may provide content for your company newsletters or intranet on the importance of saving for retirement. Your provider may have a phone team available for education and help beyond basic service questions. Other possible resources include online retirement calculators, retirement planning workbooks, and spending guides.

4)      Communicate Often – While annual enrollment events are a great way to remind employees to participate, communicating on a regular basis and throughout the year is best. Plan sponsors can consider hosting Retirement Readiness Days, group meetings and retirement seminars to educate employees.

5)      Be Proactive – Working with providers to proactively set up appointments with participants for one-on-one plan support and guidance is a great way to get the ball rolling and will help build participant confidence and ultimately boost their retirement readiness. Sometimes the best motivation is having someone else make the first move.

 Plan sponsors can help employees get on track by helping them enroll and remain invested in their retirement plans. Staying on track to retirement readiness is the larger challenge and one that plan sponsors can achieve in partnership with their provider. Adopt a proactive approach to using a combination of traditional and new communication and education tactics and you’re more likely to motivate savers to take actions that lead to better retirement outcomes.

Chuck Cornelio is President of Retirement Plan Services at Lincoln Financial Group, Philadelphia, Pa.

[1] Boomer Expectations for Retirement, Insured Retirement Institute, April 2011

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