Benefit enrollment season is typically a period of high employee engagement, making it a great time for retirement plan sponsors to boost participation through education and information. Just keep in mind: while spotlighting opportunities, avoid information overload.
Kind of Like The Olympics
As benefit expert Megan Yost puts it, open enrollment is “a bit like the Olympics of employee benefits….We can tell from the data that participants are often highly engaged with communication materials about their enrollment….They visit their benefits websites to read about what’s new and changing, they attend webinars and meetings, and they actively enroll in their benefits.” Given the high level of overall engagement, open enrollment provides a great opportunity for plan sponsors to “cross-promote retirement and financial wellness benefits because they have their employees’ attention.” Based on a study from MetLife, experts suggest plan sponsors leverage the engagement opportunities open enrollment season provides “by providing easy-to-use benefits tools, having the HR team available to answer questions, providing access to expert guidance about benefits and generally communicating more often about benefits and open enrollment.”
Of course it can be overwhelming for employees to review benefit information and make choices, so plan sponsors need to prioritize what matters most. Specifically, for example, Yost advises:
In order to not overwhelm employees, we recommend that employers and plan sponsors focus their messaging on what’s new and changing, required actions and consequences if no action is taken….This information should be in one central place so people don’t have a fragmented experience (or get frustrated) because they have to review information in several different places. Decision making resources should also be highlighted, and promotional materials (emails, on-site signage and other reminders) should focus on deadlines….It’s important that employers and plan sponsors highlight new benefits, what could be changing to existing benefits and why….This includes retirement plan changes, if applicable.
According to the MetLife survey, employees consider open enrollment “extremely important” this year, given the “challenging economy.” Experts at Plan Sponsor underscore the importance of highlighting required actions and point out:
- Typically, many employers and plan sponsors require their employees to re-enroll or reset contribution amounts for tax-advantaged accounts like health care flexible spending accounts, dependent care FSAs and health savings accounts, and they communicate about IRS limit increases, if applicable.
- Plan sponsors can also remind people about existing benefits that can be accessed at any time, such as employee assistance programs or retirement benefits….Employers may want to remind people to confirm their savings rates, investment choices and
beneficiaries, as well.
Misunderstandings and Regrets
As experienced plan sponsors know, employees frequently realize–too late–that they failed to understand choices made during open enrollment. It’s not surprising that the MetLife survey found that employees tend to procrastinate during open enrollment, with 37% saying they “wish they had more time to make the right choice.” Additionally:
- 16%…said they regret their open enrollment choices last year. The top reasons included choosing benefits that did not cover as much as expected and enrolling in too few benefits. Employees also said they regret their choices because their financial situation had changed since the time of election, and 20% said they found that the enrollment process was too complicated.
- About 60% of those employees who regretted their benefits choices said a lack of understanding and information was to blame. Generation Z and Millennial workers were among the least likely employees to understand their benefits and the most likely to feel regret over the open enrollment choices they made last year…
- 44% of employees said they did not consult others before enrolling in benefits last year.
While taking action to inform employees about the company sponsored retirement plan, it is wise for plan sponsors to also update their own protection plans. These days, misunderstandings can swiftly turn into lawsuits, and with litigation–and regulatory actions on the rise, no plan sponsor wants to personally pay for an ERISA defense attorney at the cost of $600—per hour. At Colonial, a whole year of Fiduciary Liability coverage is less than a few dollars a day, and we even include Cyber Liability coverage to protect the business and retirement plan in the event of a cyber breach. When it comes to ERISA, it’s best to be proactive: choose your affordable plan sponsor protection package here in minutes.
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