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December 12, 2011 at 09:20 AM
A new LIMRA study revealed that retirees and pre-retirees who are proactively contacted by their retirement plan provider around the time they leave their employer are twice as likely to keep their retirement plan assets with the plan provider.
“With more than $400 billion per year rolling out of employer-sponsored retirement plans and into IRAs, plan providers are looking for ways to keep these assets under management,” said Matthew Drinkwater, associate managing director, LIMRA Retirement Research. “Our study found participants who are contacted around the time that they retire or leave their employer were much more likely to retain their money in their employer-sponsored plan account.”
Not all contact is equal, however. The study found that “active” contact methods (e.g., phone, in-person contact) that allow for personal two-way communication are more effective than “passive” methods such as postal mail or email. Plan providers should consider expanding their call center staff, rather than expanding the retention program’s mailing budget, to effectively reach out and retain plan participants.
While initial retention is important to plan providers, it doesn’t eliminate the risk of participants deciding to roll over their balances at any time. In fact, the study found that half of stay-in-plan participants were not committed to remaining in the plan and nearly 20 percent said they had not considered their alternatives yet.
