Private enterprise is limbering up for the 2012 EBN-EBA Financial Fitness Challenge, an online financial-education program sponsored by Employee Benefit News and Employee Benefit Adviser in partnership with Educated Investor, a provider of financial education products. Organizations of all types and sizes, from Walmart to Woodchuck Hard Cider, are taking part in the Challenge, which began last month.

Employers make the eight-week program available to employees, who address the challenge to improve financial education as they go through the online course modules, designed to give them a solid grounding in everyday finances and retirement funding. Now closed to new participants, at press time, seven employers had rolled out the program to 1,000 employees, three were targeting around 500, and eight were going for up to 250 enrollees.


Link in the well-being chain

Many of the 18 organizations participating in the Financial Fitness Challenge say they are seeking to strengthen the 'healthy mind, healthy body' connection with a proven and affordable way to make financial education fun, engaging and successful.

Iris Montgomery, a compensation/benefits analyst with St. Elizabeth Healthcare, a nonprofit teaching hospital in Edgewood, Ky., serving Ohio, Kentucky and Indiana, sees the program as "a link in the chain" of overall well-being.

"Heart attacks are often stress-related, and there are other illnesses and diseases that are directly related to financial stress," she notes.

Franklin International Inc. in Columbus, Ohio, believes that poor financial health can undermine employee productivity just as much as poor physical health and is fully committed to improving financial literacy in the workplace.

Wellness programming at this leading manufacturer of adhesives and sealants, which includes a "Biggest Loser" style competition called "Mission SlimPossible," has been offered for more than 25 years.

"We clearly understand that lack of financial fitness induces stress and is not good for your health," says Doug Reys, Franklin's manager of compensation and benefits.

The Financial Fitness Challenge will be offered to all 300 full-time employees in Franklin's Ohio chemical manufacturing plant below the level of senior executive.

Franklin hopes that 60% of its 350 U.S. employees, or 180, participate. This group includes anyone from union production workers, security guards and administrative services staffers to various professionals working in marketing, information systems, accounting and the laboratory area.


Field of retirement dreams

The Financial Fitness Challenge is tailor-made for Major League Baseball, which plans to divide program participants into teams or divisions that would mirror the league's own arrangement, depending on how many people sign up.

Official MLB merchandise, such as bobble head dolls, would be given out as prizes to winners. Rich Hunt, director of retirement services in the New York-based MLB Office of the Commissioner of Baseball, reports that 450 to 500 largely white-collar office workers have been targeted for participation.

"I don't think our industry is much different from any other regarding employees being prepared for retirement," he explains. There is a need to know investment and budgeting basics, especially among younger people.

MLB would like to improve the current 59% participation rate in its 401(k) plan and increase below-average deferrals.

The EBN-EBA Financial Fitness Challenge will supplement MLB's Savings and Financial Education program (S.A.F.E.), which was introduced in August 2011 in partnership with MetLife.

It also dovetails with a 10,000-step wellness program from 2010 to help employees become more active.

A larger, more strategic MLB objective will be to donate funds on behalf of Financial Fitness Challenge winners to its Baseball Assistance Team, a nonprofit corporation established to help those in the "baseball family" who are in need of financial assistance.


Ending 'leakage'

Mike Kerr, a benefits consultant with Kimberly-Clark Corp. in Knoxville, Tenn., one of the world's largest makers of personal paper products, says a key message that needs to be imparted in the Financial Fitness Challenge concerns the pitfalls of living beyond one's means.

While participation and deferral rates in the company's 401(k) plan are a solid 88% and slightly more than 8%, respectively, thanks in large part to auto-enrollment and escalation features, he frets about "leakage" (e.g., irresponsible hardship withdrawals) and a lack of financial acumen.

The hope is that at least 750 to 1,000 of Kimberly-Clark's roughly 15,000 North American blue- and white-collar employees across various age groups and salary ranges participate in the Financial Fitness Challenge.

Kimberly-Clark, which offers a 401(k) and profit-sharing plan, closed its defined benefit pension plan to new hires in 1997 and froze the plan a few years ago.

St. Elizabeth Healthcare's Montgomery hopes the Financial Fitness Challenge will help at least 1,000 of the hospitals 7,283 employees "become more astute at understanding that they need a comprehensive plan" beyond simply deferring 3% to 5% of their salary.

The group includes clinical professionals, managers, executives, housekeepers, nutrition-services personnel and biomedical engineers.

Montgomery cites a number of key elements where they can lay the groundwork in a meaningful way: using available educational resources, including onsite counselors, as well as aspiring to a certain lifestyle in retirement and devising a plan of action that can be reviewed on a regular basis.

The workforce also needs to understand that life can turn on a dime, she adds, with funds needed to pay for emergency medical expenses or other costs.

Last year, St. Elizabeth's piloted a financial fitness workshop with its credit union, health care and retirement plan vendor, Diversified Investment Advisors - an effort that helped boost 403(b) program participation by 15% without automatic enrollment. The average retirement savings account balance is about $50,000 per employee.

Given the nature of their work, it's difficult to educate St. Elizabeth's employees about personal finance and investment strategies at the work site. "You just cannot predict when a patient will come in who requires your attention," Montgomery says.

Meeting up with a financial counselor may have to be done before an employee's shift begins, or on a day off.

Author Bruce Shutan is a Los Angeles-based freelance writer.





By Elizabeth Galentine

Similar to U.S. trends, pension plans in Canada continued to deteriorate in the second quarter of 2012, thanks in large part to negative equity returns and another decrease in interest rates, according to HR consulting firm Aon Hewitt. From the end of March to the end of June the median solvency funded ratio of a large sample of pension plans decreased 3%, from 69% to 66% - despite significant cash contributions made to DB plans.

The solvency funded ratio measures the financial health of a defined benefit pension plan by comparing the amount of assets to total pension liabilities in the event of a plan termination.

According to Aon Hewitt, the movement of assets, liabilities and funded ratios for this median pension plan since Jan. 1, 2010 shows assets have only increased by 12% since then. A typical pension fund earned an average annual return of 4.9% over this period, caused by disappointing equity markets performance.

While asset returns have remained low, it is the 46% increase in liabilities that has caused much of the current solvency crisis, says Aon Hewitt. This has been mainly caused by the significant drop in long-term interest rates over the period. "A 1% drop in long-term interest rates will increase liabilities by about 18% for a typical pension plan," says Thomas Ault, an associate partner and actuary with Aon Hewitt in Vancouver, "which is why the decline in interest rates since the start of 2010 has had such a dramatic effect on solvency liabilities."

By tracking the performance of a plan that employed several de-risking strategies beginning in Jan. 1, 2011, Aon Hewitt found the de-risked plan would have experienced a 75% solvency ratio at June 30, 2012 as opposed to 66% for the median plan. Those strategies include:

* Increased investment in bonds from 40% to 60% of portfolio

* Investment in long bonds instead of universe bonds to better match liabilities.

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