1. Krista Streff MBC Final Project May 14, 2007 Krista Streff MBC Final Project May 14, 2007 How employers can more effectively provide retirement planning education to employees in the workplace

2. The retirement savings gap “ 71% of all adults plan to work in some capacity for at least nine years while retired” – Journal of Financial Planning “The average worker needs to save $11,400 more annually to be on track for retirement” – PlanSponsor “64% of employees have never estimated the retirement dollars they’ll need” – Benefits Quarterly The Facts

3. Retirement plans have changed significantly  Employees are responsible to save for their own retirement  Employers must educate employees  Employees are responsible to save for their own retirement  Employers must educate employees

4. Current employer programs  Potential for programs is great  Difficult to drive desired outcome  Current communications lack impact  Need to determine most effective ways to educate employees  Potential for programs is great  Difficult to drive desired outcome  Current communications lack impact  Need to determine most effective ways to educate employees

5. 5 Research Question “Is employee participation in employer-sponsored retirement plans positively influenced by corporate communication initiatives?”

6. 6 Methodology  Sample of 180 employees working for companies offering a retirement plan  Online survey with 27 questions  Respondents given two weeks to complete the survey  Sample of 180 employees working for companies offering a retirement plan  Online survey with 27 questions  Respondents given two weeks to complete the survey

7. 7 Response  116 respondents (64% response rate)  Diverse sample  40% male and 60% female  Represented 12 different industries  Ages 18 to over 65  Variety in number of years until retirement (40% had over 20 years, 23% had under 5 years)  116 respondents (64% response rate)  Diverse sample  40% male and 60% female  Represented 12 different industries  Ages 18 to over 65  Variety in number of years until retirement (40% had over 20 years, 23% had under 5 years)

8. 8 Identifying the missing link  91% said company retirement plan was important to achieving their overall retirement savings goal  100% of respondents’ companies offered retirement plan(s)  Yet 40% were dissatisfied with retirement planning communications  91% said company retirement plan was important to achieving their overall retirement savings goal  100% of respondents’ companies offered retirement plan(s)  Yet 40% were dissatisfied with retirement planning communications

9. 9 Response to current communications Respondents asked to rank how often they read retirement plan communications from their employer. Often  Quarterly statements70%  Plan change announcements51%  E-mails 44 %  Home mailings44 %  Materials provided at meetings36 %  Interoffice mail33 %  Intranet postings14 % Respondents asked to rank how often they read retirement plan communications from their employer. Often  Quarterly statements70%  Plan change announcements51%  E-mails 44 %  Home mailings44 %  Materials provided at meetings36 %  Interoffice mail33 %  Intranet postings14 %

10. 10 Response to current programs Current employee program participation levels  General educational sessions 46%  Individual meetings28%  Retirement modeling software24%  Web-based seminars/online videos20%  Participant call center12%  Traditional videos 1%  N/A (programs not available) 25% Current employee program participation levels  General educational sessions 46%  Individual meetings28%  Retirement modeling software24%  Web-based seminars/online videos20%  Participant call center12%  Traditional videos 1%  N/A (programs not available) 25%

11. 11 Retirement readiness To what extent do you agree with this statement: “I am confident that I will be financially ready for retirement.”  Strongly agree14%  Agree44%  Unsure/undecided31%  Disagree 8%  Strongly disagree 3% To what extent do you agree with this statement: “I am confident that I will be financially ready for retirement.”  Strongly agree14%  Agree44%  Unsure/undecided31%  Disagree 8%  Strongly disagree 3%

12. 12 Employee estimated retirement savings needs  35% estimated under $550,000  Mean account balance for workers 55-64 is $53,600 1 1 Plan Sponsor survey, 2005  35% estimated under $550,000  Mean account balance for workers 55-64 is $53,600 1 1 Plan Sponsor survey, 2005

13. 13 Impacts of education programs  Improved results for employees with employer education programs  Employees with education programs 30% more confident  Employees with education programs were saving more - 82% saving at least 4% of salary vs. 63% of those without education programs saving the same  Improved results for employees with employer education programs  Employees with education programs 30% more confident  Employees with education programs were saving more - 82% saving at least 4% of salary vs. 63% of those without education programs saving the same

14. 14 What drives employee behavior? Motivators Employer incentives Employer incentives Personalized programs & communications Personalized programs & communications Simplified enrollment process Simplified enrollment process Education seminars Education seminarsDe-motivators Competing financial needs Competing financial needs Uncertainty of how plan works Uncertainty of how plan works Dissatisfaction with the plan Dissatisfaction with the plan Difficult enrollment process Difficult enrollment process

15. 15 Are employer’s communication efforts working? Yes…. some types of communications and programs are effective in positively influencing employee behavior

16. 16  Emphasize employer incentives  Company matching contributions #1 motivator  Simplify messages  30% aren’t participating due to lack of understanding  Personalize communications & programs  Help with calculating personal retirement savings needs #1 motivator for non-participants  Emphasize employer incentives  Company matching contributions #1 motivator  Simplify messages  30% aren’t participating due to lack of understanding  Personalize communications & programs  Help with calculating personal retirement savings needs #1 motivator for non-participants Effective education programs…

17. 17  Simplify & personalize all communications  Share best practices across the company  Keep employees’ needs & motivators top of mind  Advocate for financial education programs in the workplace  Simplify & personalize all communications  Share best practices across the company  Keep employees’ needs & motivators top of mind  Advocate for financial education programs in the workplace Next steps

18. 18 Questions?