How to Impact Retirement Plan Outcomes by Redefining Metrics

Last Updated: October 03, 2013

There are many reasons why plan sponsors choose to offer a retirement plan.  Some of those reasons may be to attract and retain good employees, to offer a perk to owners and employees who are highly compensated, or to reduce taxes due from the company.  Other employers may offer a retirement plan out of some moral obligation or paternalistic goal of simply doing the right thing for employees.  The goal for the participants of the retirement plan, however, is always the same:  retirement readiness. 
In today’s world of defined contribution plans, plan sponsors can choose the level of commitment they want to put forth to get their employees ready for retirement.  Much of the success (or failure) of a plan participant’s retirement readiness will be determined by the plan’s design.  Plan design features include: When can an employee enroll?  Are employees automatically enrolled or must they opt-in?  What default options does the plan have in place for savings rates or investment allocation?  These features have typically already been established, so the way most plan sponsors attempt to improve participants’ retirement readiness is through activity-based retirement plan education. To actually improve retirement plan metrics however, an education program must be results-oriented rather than activity-based. When many retirement plan education vendors create an education campaign, it contains only a list of activities.  When they monitor the success of that campaign, the metrics reflect how many flyers were mailed or how many participants showed up at the meeting.  This method doesn’t measure meaningful success; it only tracks activity.  Tracking results is significantly more valuable. Instead of asking how many employees were at the meeting, ask how many employees enrolled in the plan.  Instead of asking how many flyers were mailed, ask how many participants reallocated their account as a result of the flyer.  Instead of asking how many employees clicked on the web banner, ask how many increased their deferral percentage.  These are results-focused metrics. At Pension Consultants our experience has proven that certain activities are more effective in making a positive impact on plan participant behavior. For example, print communications are more effective than electronic communications; group meetings are more effective than print; 1-on-1 meetings are more effective than group meetings. Not only is there a hierarchy in the impact the communications can make, but mandatory attendance is more effective than optional.  Additionally, all methods of retirement plan education should include actionable steps for the participant and multiple options for implementation.  Offering a PPA-compliant advice service to supplement plan education for non-engaged participants is impactful.  On-going, consistent campaigns are more successful than erratic ones that stop-and-start over the years. You might be asking yourself, how can I make this applicable to me? Begin by tracking results so that you can make accurate cost comparisons.  It may be cheaper to send a flyer to 1,000 employees’ homes than it is to have a retirement consultant meet with all of your employees.  But sometimes the seemingly more costly option is actually cheaper when you evaluate the return on the investment.  For example, if the results goal is to increase enrollment by 10%, the 1,000 flyers might need to be mailed a twelve times to get a 10% lift in participation.  A more cost effective method to achieve better results may include staffing a retirement consultant during an eight hour benefits fair. At Pension Consultants, we know that to achieve success, measurable results must be produced.  We use national, industry and plan size benchmarks as a tool to measure such results.  By regularly monitoring and reporting on results to evaluate progress and goal achievement, adjustments to education can be made based on plan needs and participant needs.  Regardless of available resources, through consultation, we match the best implementation methods to meet the goals established for a plan. Ultimately, only when the plan is results-focused can the best methods be used to improve the retirement readiness of the participants. Contact Pension Consultants to learn more about developing a results-driven retirement education for your retirement plan. PCI’s archived blog entries are dated, the rules and statutes referenced may have changed. The analysis or guidance within these blog entries may have become stale, dated, or no longer accurate. PCI will not update or change these entries to reflect the latest analysis or development.


Pension Consultants, Inc.



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