5 Ways to Help Carry Momentum From Open Enrollment to Retirement Planning

 

As open enrollment draws to a close, engaging employees around their retirement benefits now can help drive meaningful increases in plan participation and contributions.

To say that open enrollment was a little different this year may be an understatement. The pandemic has been a reminder of the importance of benefit plans and programs even as long-term planning has taken a back seat to the immediacy of the COVID-19 crisis. Health care worries and financial insecurity are taking precedence in 2020, as 14% of Americans with retirement savings have had to tap into their funds during the coronavirus pandemic, demonstrating the financial urgency of the ongoing crisis.1

At this time of year when employees are actively engaged in many of their employer-provided benefits, there is an opportunity in the post-enrollment period to help them once again shift their focus to the future to best support their goals for retirement. In fact, one study shows that when employers incorporate key aspects of their retirement plan and financial wellness into open enrollment communications, 44% more participants enroll in a 401(k) plan, while existing participants double their contributions.2

Statistic: Fourteen percent of Americans with retirement savings have tapped into their funds since the coronavirus pandemic began.

Building on your communication strategies from open enrollment to include financial preparedness and well-being has taken on even greater importance this year. Here are five best practices to consider in driving engagement with your employees around their retirement benefits during this important time.

Address Employee Concerns With Compassion and Empathy

Employees are experiencing unexpected disruption in both their personal and professional lives, and they need more empathy and attention than ever before. This year is not a time for boilerplate communications and formal presentations. With more businesses switching to remote work, employers may not be able to host in-person benefits sessions, but there are other ways to interact and directly engage with employees on a more personal level.

Consider the materials that can best address employee concerns and feedback that, or how communications can recognize the impact of COVID-19, and then point employees to the right financial resources. Employers can also extend support by “being real” with employees, making space for people to feel comfortable asking hard or sensitive questions, potentially offering one-on-one check-ins via phone or video.

An empathetic approach not only proactively acknowledges the challenges the pandemic has brought, but it also provides unique opportunities for employees to make thoughtful and intentional decisions for the years ahead.

Recognize All Employees’ Needs

The questions employees have today are not the questions they had last year, nor will they be the same as the lingering effects of the pandemic continue to unravel across the globe. Concerns like cost and affordability, for example, will be top of mind for many employees, so you may want to address these carefully.

According to a McKinsey study, 80 percent of respondents say the crisis is materially affecting their daily work lives.

However, different employees will also likely be affected differently by the pandemic, and will require different sets of information. Employees who are furloughed or laid off, for example, may need guidance on how to preserve their retirement savings and budgeting strategies. Employees still on the job may benefit from reminders to continue making contributions and even increase their savings rate. Others may have questions about early withdrawals and penalties. Consider supplementing group communications with personalized communications that help employees understand their unique stake in retirement planning.

In fact, the more relevant and personalized your communications are, the more effective they may be in increasing participation and engagement. One study shows companies that use personalized statements to inform employees about their 401(k) plans have, on average, a 6% higher participation rate compared with those that don’t, and those participants contribute about 1% more of their salary to their 401(k) plans.4

Consider New Tools To Facilitate Employee Education

With so many employees working remotely, traditional on-site educational methods may be less relevant or effective for many organizations today. Consider replacing conventional channels of communication with more targeted or digital alternatives, such as SMS, workplace chat, prerecorded presentations, conference calls, virtual meetings, or direct mail, which can be particularly helpful for non-desk employees who don’t have a computer or a work email.

Virtual meetings can be an effective tool this year, offering a convenient way for people to consume and engage with information about their benefits while staying physically apart. Consider planning these sessions like you might an online workshop, providing attendees with materials to review ahead of time, offering a clear agenda, leveraging videos or visual slides to teach key concepts, and using interactive options like in-meeting chat to engage attendees and answer questions in realtime.

Education is important in getting employees engaged from the beginning, but this year may likely require many organizations to rethink their delivery methods by incorporating new platforms and tools to connect with people remotely and help them gain an understanding of their retirement benefits.

Embrace Transparency When Communicating Changes

The effects of the pandemic are driving some companies to reevaluate how their employer - sponsored retirement plans are designed. For example, according to a study by the Plan Sponsor Council of America, more than 20% of large organizations indicated they are suspending matching contributions.5

Regardless of company size, the impacts of COVID-19 are forcing employers to confront an array of complex and sensitive issues around human resource policy, employment, compensation and their overall benefits programs. To help foster a more positive dynamic during an uncertain time, it’s important to be both honest and thorough when communicating any new decisions or changes to company plans.

It may be helpful to explain the changes and why they were made. Consider discussing how this year’s policies may be different from previous years, or how they may change again in the future. The same applies to talking through the trade-offs, if any, of the decisions made. This level of transparency can help dispel employees' confusion or distress, can help them feel more involved in the conversation around their company 401(k) plans, and help set the right expectations from the get-go.

Provide Ongoing Support

Even before the pandemic, many employees didn’t know or fully understand all the potential benefits of their retirement plan. According to ValuePenguin, 63% of Americans don’t understand exactly how it works.6 As the pandemic continues to impact the economy, it may be more necessary than before to repeat and reinforce messages around the importance of creating a retirement savings plan, saving early and often, and focusing on the long-term.

Many participants may have stopped contributing to their retirement plans or are no longer confident about investing. According to one study, three out of four respondents are concerned about the economic and investing environment as a result of the pandemic.7 To help build confidence in your benefits and your employees’ retirement readiness, it may be necessary to engage, and consistently re-engage, employees to take advantage of existing benefits. Timely, relevant, and ongoing communications help employees access information year-round, and encourage them to take the positive steps they need to improve their long-term financial wellness and retirement readiness.

When Employees Thrive, Companies Benefit

COVID-19 has put the entire business landscape in uncharted territory. Employers are facing difficult decisions about what they will offer to their employees, and employees are making complex and nuanced judgments about their financial future.

During this period of heightened uncertainty, the ability to communicate and engage employees effectively will be important in helping create greater confidence in their present and future. And, for companies, it provides an opportunity to help preserve employee productivity and their bottomline. Building on the engagement from open enrollment offers a unique opportunity to reinforce the importance of planning for the future.

Connect with Us

Learn more how we can help your organization. Fill out the form below and a representative will get back to you.







All Fields Required

1 14% of Americans with retirement savings, both working and unemployed, have already tapped into those funds. CNBC. May 27, 2020. https://www.cnbc.com/2020/05/27/14-percent-of-americans-with-retirement-savings-have-tapped-into-funds.html
2 Improve financial wellbeing with 401(k) integration during open enrollment. Alight. 2020. https://alight.com/research-insights/401k-integration-open-enrollment
3 COVID-19 and the employee experience: How leaders can seize the moment. McKinsey. June 29, 2020. https://www.mckinsey.com/business-functions/organization/our-insights/covid-19-and-the-employee-experience-how-leaders-can-seize-the-moment
4 How to Improve Employee 401(k) Participation Rate. Enrich. August 12, 2019. https://www.enrich.org/blog/how-to-improve-employee-401k-participation-rate
5 How Are Plan Sponsors Responding to the COVID-19 Pandemic? PSCA. April 14, 2020. https://www.psca.org/press-room/CARES_snapshot
6 Nearly two-thirds of Americans are confused about this simple way to save for retirement. CNBC. March 7, 2019. https://www.cnbc.com/2019/03/07/63-percent-of-americans-are-confused-about-401k-retirement-plans.html
7 COVID-19 Retirement Reset Tracker Report. Alliance for Lifetime Income. May 2020. https://a8836856ef.nxcli.net/pdfs/COVID-19-Retirement-Reset-Report-for-Release-May-2020.pdf

Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under the Investment Advisers Act of 1940, ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at www.morganstanley.com/disclosures/dol. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

© 2020 Morgan Stanley Smith Barney LLC. Member SIPC.

CRC#3290761 (11/2020)