‘Plain and clear’ statements drive up retirement savingsNews added by Benefits Pro on March 19, 2014
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By Allen Greenberg

LAS VEGAS – While regulators and the retirement industry fight over lifetime income illustrations, the federal government’s Thrift Investment Board says its participants’ savings rates shot up after it redesigned its account statements to emphasize monthly income projections.

“We just made it very clear and plain,” said Greg Long, executive director of the largest defined contribution plan in the world.

The change, most significantly, involved prominently displaying an account holder’s projected monthly income in large type so that the “mailmen, senators and everyone in between” who’s in the plan can’t miss it.

Long, speaking Tuesday at the Health and Benefits Leadership Conference and Expo, said the change helped drive up savings in dramatic fashion.

His remarks came during a presentation on the looming retirement crisis and its implications for employers.

Also helpful, Long said, was a decision by the plan to offer participants the opportunity to commit to a partial annuity, allowing them to leave some of their savings in place.

Both ideas have been slow to win over skeptics in the private sector, with concerns about new government mandates and fiduciary obligations.

The U.S. Department of Labor – acting on the notion that managing finances in order to provide income for life is a tremendously difficult but important task – has been working on regulations that would require the inclusion of lifetime income illustrations on plan account statements. Resistance, however, has been fierce from the retirement industry.

There are almost 660,000 employer-sponsored defined contribution plans covered by the Employee Retirement Income Security Act. Of these, about 500,000 are participant-directed, meaning participants are responsible for directing the investment of their own retirement assets.

Under the DOL’s contemplated proposal, statements would show the balance of a participant’s retirement account, as well as a projected account balance at retirement.

Regulations aside, Catherine Golladay, vice president of participant services at Charles Schwab, told the audience her company has transformed its call-center operations so the conversations its employees have with participants take on a consultative focus.

The idea is to have a deeper dialogue about participants’ “whole financial life,” she said.

It’s not a script, not a transaction, not a phone call, but a relationship, she said.

The results, according to Golladay, have been positive, with average call lengths rising from 4 ½ minutes to 9 ½ minutes and high satisfaction rates. Best of all, she said, the comments from participants reflect a sense that they were dealing with someone who was caring, didn’t rush things and made matters easy to understand.

Originally published on BenefitsPro.com
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