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Founding TPSU Adjunct Lecturer Joe Brummel heading up the Minneapolis and St. Paul Educational Zones describes how he takes employees not interested or engaged on their company’s defined contribution (DC) plan and turns them into motivated learners eager to participate and appreciative of the benefit offered by the company. Though a big advocate of behavioral finance which has spawned effective auto features, Joe knows that getting employees engaged moves them further along the path to a successful retirement.
Some employees, which Joe calls vacationers, show up at DC education meetings for the free food or just to take a break – others feel like prisoners at mandatory meetings checked out from the start. Joe views his job is to turn these employees into motivated learners which he accomplishes in a number of ways:
- Tailor the message to the audience – Joe sits with the plan sponsor to understand the demographics, income and education of their workforce.
- Make the message simple.
- Make it easy which is different than simple – for example, losing weight is a simple concept hard to accomplish.
- Put the message into digestible bytes in a language they can understand.
- Make it actionable.
Joe calls this method his Strategic Education Approach.
At a manufacturing client with low income workers and 46% participation in their 401k plan, Joe and his team conducted 12 meetings over a few days and focused on things like the Retirement Savings Contribution Credit. Depending on their income, workers can get an additional $1,000-$2,000 tax credit if they participate in their employer’s retirement plan. According to a Transamerica survey, less than 25% of these people are even aware of this benefit because it’s not in the IRS 1040EZ Form. The group obviously got the message because months later the participation rate soared to 94.8%.
Auto enrollment and the rest of the Ideal Plan are obvious, easy and simple ways to improve retirement readiness but plan sponsors should not stop there. Participants need to understand the benefits of a DC plan or else there is danger their will opt out or complain. More importantly, engaged workers appreciate what the company is doing for them making them less likely to leave and more productive not worrying as much about finances.
