How important is it for employers to play an active role in educating employees about investment decisions?
Source: Towers Perrin TP Track: Shifting Investment Risk to Employees: The Landscape Changes © May 2002
As Exhibit 1 indicates, respondents feel it is less important for employers to provide investment education to retirees. They also do not feel it is the employers´ responsibility to provide investment education for sources of retirement income that are not company-sponsored. Wide Gap in Current Levels of Employee EducationWhile most of the respondents agree on the importance of the employer role in educating employees, the level of current involvement varies widely. Nearly one-quarter of respondents (24%) say their companies offer only basic information on an as-needed basis, and 11% say their companies offer no information at all. The remaining respondents say their companies offer detailed information, either on an ongoing basis (33%), or at enrollment and annually thereafter (32%). (See Exhibit 2.) Exhibit 2. What level of investor education does your company offer to employees?
Source: Towers Perrin TP Track: Shifting Investment Risk to Employees: The Landscape Changes © May 2002
"Our findings suggest that employers are not doing enough to successfully communicate the basics of investor education," said Mark Schumann, head of Towers Perrin´s Communications practice. Schumann called on employers to rededicate themselves to the task of educating their employees about company-sponsored retirement plans. "Companies need to bring back the level of strategic communication thinking that occurred when these plans were first introduced," stated Schumann. "They must provide employees a carefully planned mix of educational materials via the Web, face-to-face communications and multimedia. This does not mean simply dusting off the communications used in the past. The stakes are higher today, and employers will need to develop new content as well as explore new channels of delivery for educating employees about retirement investing." Information Delivery: Web Is Most Prevalent, but Face to Face Is PreferredThe TP Track survey also found that employers use a variety of information delivery channels to communicate investment information to their employees. Companies´ Web sites/employee portals are the most frequently used delivery channel (79%), followed by annual print materials (67%), meetings/seminars (66%), quarterly print materials (61%) and call centers (56%). "The Web may be the most dominant delivery channel, but our survey shows the preferred method in this category is face-to-face communications via employee meetings or seminars," stated Schumann. Employers to Continue Matching Contributions in Employer Stock
The TP Track survey asked respondents whose companies currently make matching contributions in employer stock how their organizations were likely to react if Congress passed new laws that, among other things, would make it easier for employees to diversify out of company stock. "We are glad to see that employers are willing to take the lead on this issue," noted Kerstein. "Perhaps the most interesting finding is that 44% of respondents believe their companies would change the form of the match to permit more diversification even if Congress doesn´t act." Nearly two-thirds (63%) of the respondents said they believe their companies would make changes in plan provisions to comply with the new laws. Almost one-third (32%) were unsure how their company would respond. Only 5% predicted that matching contributions would stop. About the Survey
This is the third installment in a series of TP Track surveys on varying issues in Human Resources, Retirement, Health and Welfare, and other benefit-related topics. Representatives of 122 companies responded to the survey. All of the respondents are participants in their organizations´ retirement plans, and half of them have some level of involvement in designing, managing or communicating those plans. About Towers Perrin
Towers Perrin is one of the world´s largest management and human resource consulting firms. It helps organizations manage their investment in people to achieve measurable performance improvements, focusing on human resource strategy and service delivery, benefit and compensation design and implementation, employee and organizational communication, HR technology and outsourced HR administration. The firm has more than 9,000 employees and 78 offices in 75 cities and 23 countries. More information about Towers Perrin is available at www.towersperrin.com. For Information:
Stanley Davis
(914) 745-4191
davissw[at]towers.com