PSNC 2024: Enhanced Engagement Efforts

When looking to improve participant engagement in the retirement plan, it is important to consider that participants, depending on their age and life stage, have varying preferences of how involved they want to be with saving for retirement and selecting their investments. 

Landon Barnes, assistant vice president of customer experience retirement income solutions at Principal, said at last week’s PLANSPONSOR National Conference in Chicago that an effective strategy is to design retirement programs with three paths in mind. 

The first path that some participants may desire is the do-it-yourself route, where they can select their own investment vehicles completely on their own. Others prefer a do-it-with-me approach, where they partner with the plan sponsor to receive some guidance about what the best options are for them. Lastly, the third path is for participants who want a completely hands-off approach and want their investments to be managed for them. 

“The challenge is really understanding what the life stage of the participant is [and] what is their mindset?” Barnes said. “You need to [design plans] with the understanding that [participants] are not going to stay in that same stage, that same mindset forever.” 

Peter Kapinos, vice president and head of workplace and investment marketing at Empower, presented data that was collected from one million participants whose accounts are recordkept by Empower and exemplified how participants’ savings rates lined up with their level of engagement.  

For example, for those who were defaulted into a target-date fund and were unengaged (rarely visiting the portal or using the call center), their average savings rate was around 4.9%. In comparison, for those who were defaulted into a TDF but were more engaged, their savings rate was around 7.3%, and those with a managed account had an average savings rate of 8.2%.  

“You need to get people to think about the 401(k), the 403(b) or the 457 in combination with the rest of [their] finances,” Kapinos said. “If we can get people to engage more, use more of the plan designs that you have … [it will result in] significantly better retirement outcomes.” 

On the Empower dashboard, Kapinos said participants can link accounts together and look at all their finances side by side. He said the average savings rate for participants on the Empower dashboard is 10.5%. 

“We see people who are linking accounts are saving 30% more than the people who have not taken advantage of those types of tools,” Kapinos said. 

Kelli Send, principal and senior vice president of financial wellness services at Francis LLC, noted that there are currently four generations in the workforce, and as a result, it is critical to develop engagement methods around these different age groups. For example, she said only using email communication is not effective, as younger participants are less likely to pay attention to mass emails. 

However, she said home mailings are often effective, particularly because the employee may not be the “treasurer in the family,” but rather the employee’s spouse or partner could be the person managing finances in the household. As a result, home mailings might be a better way to communicate with participants and their partners.  

“We’ve also got a lot of people that are very into videos,” Send added. “We’re doing a ton of YouTube-style videos to communicate … it doesn’t have to be an hour-long group meeting. It can be very short and sweet.” 

In addition, Send said another effective strategy is creating incentives. For instance, she said Francis conducted a campaign called “Sock It Away” where if participants increased their savings by 1%, they received a pair of funky socks. Send has also found success with allowing participants to use wellness points to reduce their health care costs. 

Lastly, she said it is important to get senior managers to attend education meetings.  

“If you have a hard time getting folks to come to voluntary meetings, when they see a senior manager walking down the hallway to go that meeting, trust me, they’re noticing,” Send said. “That makes a huge difference.” 

Barnes said trying to engage younger participants can be challenging, as they are not seeing the instant value in saving for a future that may seem far away.  

“If their parents never talked about [saving], then they’re not evening thinking about this,” Barnes said. “If they don’t learn about [saving] in school … they’re coming in a little more immature before they even start, and [they] have decades before they actually see the value of everything they’ve been saving for.” 

Barnes said giving participants nudges that tell them they are on the right track and that they should be proud of the progress they have made can help transition people from feeling anxious about retiring to feeling more excited about retirement and saving as a whole.