Client Service October 27, 2017

Benefits Need to Be Communicated Year-Round

By making workers aware of health and financial benefits, employers can make their workforce more engaged and productive—and avoid costly expenses.
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Most employers inform their workforce about their health, retirement and financial wellness benefits once a year—at open enrollment, Benz Communications maintains in its report, “The Value of Investing in Benefits Communication.” The problem with that is people encounter personal, health or financial crises at unexpected times outside that narrow window.

Should a worker not be able to address a problem with the resources available from his or her employer, they can easily become more distracted and less productive at work, Benz says. If it is a health-related issue, the employer will have to bear those costs. Or, if it results in workers not being able to retire at the appropriate time, the employer has to grapple with workforce issues and the higher cost of insuring older people.

While employers may not give benefits communication much thought, it is something that advisers can bring to their attention, Benz says. Citing data from Quantum Workplace and Limeade, Benz notes that 38% of employees who believe that their employer cares about their health and well-being are more engaged. Seventeen percent say they are more likely to continue working at their employer in a year’s time, and 28% say they would recommend their employer to a family member or acquaintance.

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Conversely, Benz says, Gallup data indicates that disengaged employees cost U.S. companies $450 billion to $550 billion a year in lost productivity—and in 2015, only 32% of workers said they were engaged with their jobs.

To reach people throughout the year, employers need to develop a website devoted to their benefits program and make the information also accessible via smartphone, tablets and social media, Benz says. Employers also need to develop a year-round calendar for communications: “Tips, reminders and updates sprinkled throughout the year in bite-size chunks to employees and their families,” the report states.

According to the report, electronic delivery should not be the only communications channel. Employers should use postcards, posters, flyers, as well as blogs and text messaging. Then, to see what is resonating among its employee base, employers should examine web traffic and email open and click-through rates.

Benz says that with an effective benefits communications strategy, employers could even migrate their workforces to high-deductible health plans with little pushback—and that they will find their employees’ productivity rises substantially.

In conclusion, the report says, “Employees are the source of all productivity and growth. They deserve communication that helps them better understand their benefits so they can get the most out of your key programs. Ultimately, this will drive better health and financial security for everyone.”

Client Service October 26, 2017

Pensions Give Teachers an Incentive to Stay on the Job

Because of shared and predictable expenses, they also offer greater benefits than defined contribution plans, the National Institute on Retirement Security says.
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Pensions are a key tool for schools to offer to teachers, the National Institute on Retirement Security (NIRS) says in a new report, “Win-Win: Pensions Efficiently Serve American Schools and Teachers.” Pensions give teachers a tremendous incentive to stay with their employer, benefitting the employer with a professional with years of experience.

“Employers looking for the best outcomes for their students thus should want to keep dedicated and effective teachers in their jobs as long as possible,” NIRS says in its report. “DB [defined benefit] pensions are a well-worn labor management tool to achieve exactly this outcome.”

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From the teacher’s perspective, pensions offer higher and more balanced benefits than those from a defined contribution plan, since expenses are shared and are predictable. In addition, funds in the pension plan remain invested, even when a teacher retires.

The higher benefits are particularly true for lower-income and middle-income teachers, NIRS says. “The data shows that income inequality is less for retirees with DBs than those without DBs,” It adds, “DB pensions can help teachers prepare for a decent standard of living in retirement, and they can do so more effectively than DC plans. This is crucial, as Americans generally face a growing retirement crisis” due to the fact that DC plans require Americans to take responsibility to save for retirement.

The NIRS points out that DB pensions in the public-sector encourage employees to save for their retirement; both employers and employees generally share the cost, with both making contributions towards future benefits. The median employee contribution rate was 6.0% in 2015 for state and local government employees who also had Social Security, and 8.1% for those who were not covered by Social Security. In comparison, in DC plans employees typically can choose how much to contribute to a DC plan or they can choose to not contribute at all.

In addition, teacher pensions make it easier to keep money in a retirement plan for retirement. In most cases, teachers cannot access their retirement benefits before they are retired. Only one state allows teachers to take out their own contributions in a pension plan, but there are limits in doing so to ensure as much money as possible goes towards retirement security. In comparison, DC plans often allow for participants to take loans and hardship withdrawals.

Citing data from the National Retirement Risk Index (NIRI) from the Center for Retirement Research at Boston College, NIRS notes that by 2013, the NIRI showed that 52% of American households could expect to make cuts in their standard of living in retirement.

NIRS says it issued this report as some school districts have moved partially away from from DB plans. DC plans lead to higher turnover, NIRS says. However, NIRS concedes that some public pension plans have been underfunded in recent years. They have dealt with this by both increasing contributions and lowering benefits, NIRS says.

In conclusion, NIRS says that schools should remain committed to DB plans while managing “the long-term challenge [of] maintain[ing] these crucial benefits on a sustainable basis by improving states’ pension funding through continued increases in employer contributions.”

NIRS’ “Win-Win” report can be downloaded here.

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