Most effective plan communication is simple, flexible: American Benefits Council

As the ERISA Advisory Council considers recommendations to the Labor Department regarding retirement plan communications to participants, J.P. Morgan’s Managing Director of Retirement Plan Services, Donn Hess, testifying on behalf of the American Benefits Council, urged the panel “to encourage experimentation in this area, not a mandate of any particular form of segmentation of communications.”

The ERISA Advisory Council is currently examining what communication efforts and plan design options are most effective in encouraging participants to save for retirement. Hess emphasized the need to accommodate different approaches to participant communication, since employers’ familiarity with their workforces allow for more tailored and effective messages.

“The best participant communications are simple; they help participants make logical decisions with regard to their financial savings; and they employ diagnostic techniques that not only target based on employment status, but also on demographics and behavioral patterns,” Hess said.

“Communication is a critical tool for navigating changes to the plan, changes in lifestage and changes in employment status,” Hess added. His testimony described in detail certain techniques that could be used to improve the efficacy of retirement plan communications. Along with automatic enrollment and escalation features, which have substantially improved participation and savings rates, the right communications plan can play a powerful role in helping plan participants achieve personal financial security in retirement, said Hess.

Source: American Benefits Council news release, June 6, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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