Employer-sponsored retirement plans continue to offer employee participants financial stability after they leave the workforce, but often a 401(k) plan with a strong employer match is meaningless if employees don't know how to take advantage of it.
More than three-quarters of companies offer online tools to educate employees about retirement savings plans, according to a 2011 report by Transamerica Center for Retirement Studies. Online tools have gained in workplace popularity, especially with larger organizations. But most workforces still employ a large number of people near retirement age, many of whom prefer in-person conversations with a financial adviser or would rather have plan descriptions mailed home.
Online and e-learning programs are accessible and fairly low-cost. Because the presentations are available 24/7, employees can learn about their retirement plan or get advice when it's most convenient to them. Proponents argue these systems are more engaging because employees will use them when they're interested, and therefore are more likely to take immediate action to change their asset allocation or increase their contributions.
"Online provides you significant reach at a fairly low cost. Face-to-face is expensive and could have scheduling issues," explains David Wray, president of the Plan Sponsor Council of America. He believes enabling participants to interact with and pose questions to a presenter can be more effective, but concedes that "online systems are becoming more sophisticated. We're moving beyond online calculators. You now have webinars where there's actual interaction electronically."
According to a PSCA survey, more sponsors are using Internet education as a retirement tool, increasing to 59% in 2010 from 54% in 2009. Internet tools have become standard features on vendors' websites. But it becomes a question of how hard the employer pushes employees to use those tools. According to the survey, 72% of sponsors still use an enrollment kit with printed materials to educate employees on financial issues.
Meanwhile, 53% of employers used email as the main vehicle to inform participants about plan changes in 2010. And according to Wray, some sponsors are experimenting with social media platforms.
Yet, there are drawbacks to educational tools - the biggest being if the participant doesn't act, says Douglas G. Prince, CEO of Praxis Fiduciary Advisors. Certain online tools that integrate action, such as asset allocation during the online tutorial, can help spur workers to immediately apply what they've learned. However, "I don't think online will ever replace face-to-face because people learn in different ways," he says.
Despite the challenges, Annette Grabow, manager of retirement benefits at Minneapolis construction company M.A. Mortenson Company, says her benefits team works hard to make retirement learning fun with competitions where employees earn points for attending workshops that can be redeemed for prizes.
Grabow and her team draw attention to their educational programs with a catchy campaign. Her team tries not to inundate employees with too much information. But, to keep their attention, emails will contain flash and cartoons. "We try to do things that are eye catching," she says.
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