Motivational Messaging: Retirement Savings


How’s participation going in your company-sponsored retirement plan? Amidst all the fiduciary duties involved in providing the plan, it can be easy to lose sight of the end goal—thriving retirement for all. Here are new insights about messages to motivate participants to save more.

Help Participants Help Themselves

What messaging is more likely to capture the attention of plan participants: fear or encouragement? That’s what the Defined Contribution Institutional Investment Association set out to study. Here are the messages they tested—and the findings, as reported by 401k Specialist:

 Fear-based messaging: Caution! We project youre going to have a 29% shortfall when it comes to achieving your retirement income goal. You will have to make a few changes in order to get to 100%.

 Encouragement-based messaging: Great news! We project youre on track to reach 71% of your retirement income goal. Although you are not at 100% just yet, a few changes can help you reach this goal.

 As you might suspect, DCIIA found the fear-based approach led to greater post-engagement, an effect the studys authors found was surprisingly robust across questions and persisted even when controlling for participant demographics. Of the two approaches tested, a fearmessaging approach appears to result in higher subsequent intended engagement,” the paper states.

 Notably, the research found either message significantly improved the likelihood of engagement actions. This strongly suggests that providing any type of retirement income statistic to participants, regardless of how it is messaged, is likely to improve engagement.

 Set High Expectations

 Of course in addition to sharing a steady flow of motivational information with participants, offering or increasing matching company contributions also inspires employees to save more. Other strategies to encourage more retirement saving among participants include: enabling automatic enrollment in the retirement plan; expediting part-time worker participation; and, providing “catch-up contribution” opportunities for employees 60 and older.

 Keep in mind that choosing and monitoring all plan service providers is an important fiduciary duty for plan sponsors. Industry experts advise us to have high expectations when contracting with service providers. Are your plan service providers excelling at giving participants high quality, data-rich information, and education? Don’t be shy about asking for more communication and educational support for your participants. Also, make sure participants are receiving plenty of up-to-date information about password security. Bad password practices open retirement accounts to cybercrime. The Employment Benefits Security Administration (EBSA) has directed plan sponsors to ensure participants are receiving specific security tips to protect their accounts. Make sure you have shared them with participants—and documented your efforts!

Of course, the protection of retirement funds always needs to be high on your radar as a fiduciary. Failure to have a current ERISA Fidelity Bond that appropriately covers the retirement plan at all times puts plan sponsors at risk. Consequences include increased likelihood of a Department of Labor (DOL) audit, lawsuits—and even being held personally liable for losses. Pause today and be sure that your required ERISA fidelity bond is up to date—and properly covers your plan.

Colonial Surety Company makes it easy for you with our user-friendly, digital, and direct service. Colonial’s unique, efficient and affordable packages arm plan sponsors with: the ERISA bond required to protect the assets of the retirement plan from theft; Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach; and, Fiduciary Liability coverage to protect you and your assets from personal liability.

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