For some employers, getting employees to formulate a financial plan for retirement is much like leading a horse to water. You can’t make employees plan any more than you can make that old horse drink.
But if you can understand why employees aren’t considering retirement or acting on the messages you’ve been disseminating, you can improve the message. You might even get them to take a sip.
According to a white paper by Buck Consultants, there are five key reasons that employees don’t save for retirement.
- They have a live-in-the-now attitude (Why should I? I could die tomorrow!)
- They assume they’ll be healthy enough that they will be able to work until they die.
- They have a paternalistic faith that someone will look after them.
- They are unwilling to delay gratification (spend now, save later).
- An inability to understand the math.
So, what can employers do to help their workforce make financial decisions regarding retirement?
Message delivery
Paper is not dead, nor should it be. While many pension professionals agree that pension booklets and other documentation gets tossed in the nearest blue bin, the study finds that paper is the most accessible and most common form of communication for financial education that employers use.
While survey participants didn’t rate their employer communication as exemplary, they did indicate that they use newspapers and magazines to aid them in their financial decision making.
The white paper advises employers to adopt some of the age old media traits to help get the message delivered to intended audiences by using words people understand, catchy headlines, interesting visuals and communicate more frequently.
Importance of technology
The most common channel of financial education is learning from family and friends but when it comes to sharing their views and information online, Facebook and Twitter aren’t where people want to do it. In fact, the research states that “stand alone financial websites with specific functionality” is where employees prefer to get this information online.
Employers should utilize their existing intranets and create a consolidated information source with all the tools in one place.
The white paper says that plan sponsors don’t need to invest in new technologies but can make better use of the current ones. According to the data, email is a more effective and acceptable form of communication from an employer than a text message.
Establish trust
Unfortunately, the study also found that employees typically don’t trust their employers, financial advisors or pension trustees. They think each have a vested interest that doesn’t match the best interest of the employee. To overcome this, the research recommends employers “provide the best quality information, offer appropriate benefit choices and connect employees with one another.”
You can download the full white paper here.