Boosting Participant Engagement in DC Plans

Plan design enhancements, such as the implementation of automatic enrollment and automatic escalation features, have gone a long way toward improving participation in defined contribution (DC) plans. But plan sponsors may find themselves surprised by the lack of reaction from participants when they implement much-discussed changes such as the addition of auto-features, streamlining menus and other best practices.

While this lack of engagement can prove beneficial when plan sponsors are seeking to evolve and overcome participant inertia to better ensure optimal retirement outcomes, it can also prove disheartening when they’re trying to get participants more actively involved with planning and saving for retirement through their DC plan. Plan sponsors can boost participant engagement by using effective communication strategies.

1. Communicate and contextualize: When sharing information with participants, use clear, concise communications that also provide context. Don’t assume that they will “fill in the blanks” and draw conclusions as to what they need to do and how it could benefit them—provide specific, actionable information. Where possible, contextualize the information in light of their other benefits, their overall budget and financial wellness profile. Spell out the “What?” “When?” and “Why?” of the information you’re sharing.
   
   
2. Tailor your messaging: People are now used to customized experiences—on-demand streaming and “you might like this” preferences served up everywhere from Amazon to YouTube, and more. Where possible, provide unique messages to different demographic segments within your participant population. Supply easy ways to click through to more information, such as retirement calculators and other tools, as well as their unique DC plan information. If possible, track those clicks for metrics that might shed light on the success rate of the communication. (For a deeper dive, see “Successful Plan Communications for Various Population Segments” by the ERISA Advisory Council.)
   
   
3. Leverage technology: Take a fresh look at the latest tools available to support participant engagement and communication. There’s more out there than just email and a website. Can you create an explainer video? Does your recordkeeper have technology you can leverage? Is text-based messaging a possibility? Can you use gamification, artificial intelligence (AI), or other innovations to be more effective and capture the attention of your younger participants?
   
   
4. Plain English, please—and perhaps some translations, too: It’s not breaking news that most employees are not investment savvy, and communicators have long argued for “plain English” information about benefits and retirement plans—and yet if you reviewed recent examples of participant communications, more than a few would still be riddled with investment jargon, complicated charts and generally dense, visually unappealing content. Take a good look at what information your participants are receiving about their plan and consider whether the average employee will really understand it—or even want to attempt to try. Given your employee demographics, you may want to consider offering information in multiple languages, as well. (This tip and many other best practices are discussed in DCIIA’s white paper, “Rethinking Defined Contribution Communication and Education.” In a forthcoming paper, DCIIA member contributors will share insights on bolstering participant engagement and best practices in communication when rolling out a retirement tier/retirement income solution.)
   
   
5. Consider partnering with employee/business resource groups: Collaborating with employee affinity groups might help to boost engagement. They could, for example, review and provide feedback on your participant communication materials or create spaces for candid conversations where employees might feel more able to share questions and concerns and learn from each other. Peer-based discussion and accountability can be a strong motivator for positive behavior when it comes to finances and savings.
   
   
6. Be inspired by social media and leverage internal communications pros: Can you recruit internal “influencers” who might amplify important messages about retirement savings and your DC plan? Do you have an internal discussion platform where you might encourage employees to share their thoughts, updates and questions on the plan in an open forum? Can you partner with your internal communications team on a targeted campaign, perhaps creating hashtags, providing images employees can share and offering prizes for participating in the campaign?

In his “Behavioral Bites” blog, DCIIA Retirement Research Center Director Warren Cormier notes, “We hear a great deal about fostering engagement among participants when it comes to retirement savings. However, with today’s prevalence of automated features, does engagement still matter? The answer is ‘yes!’ In our models, we have found that people who are highly engaged in activities surrounding their retirement account have much higher deferral rates and are much more likely to trust and heed the communications messages from their recordkeeper and employer. Perhaps most importantly, engagement drives what we call ‘financial courage’—the strength to stick to their retirement journey regardless of what happens to the market or to their personal situation. Essentially, engagement creates a much higher probability of retirement readiness.”

Karen Witham is vice president, communications and marketing, at the Defined Contribution Institutional Investment Association (DCIIA).