July 11, 2012 (PLANSPONSOR.com) – Employees who have one-on-one sessions with retirement professionals more likely participate in retirement plans and save more than those who do not.
The Principal Financial Group found the higher deferral rate combined with the commitment to increase savings among those who attended one-on-one meetings could mean an additional $242,000 at retirement--based solely on employee deferrals. That could translate into an extra $905 more a month in retirement income, which is 69% higher than participants who did not have one-on-one education.
"We know from face-to-face educational meetings that retirement savers benefit from hearing a person explain how the retirement plan works rather than having to shuffle through documents by themselves," said Barrie Christman, vice president, individual investor services at The Principal. "Take it a step further with personalized one-on-one meetings on company time and significantly higher numbers of participants are taking actions that can help get them to the 11% to 15% contribution range--including employer match—that we believe is needed over the course of a career to have sufficient retirement income."
The analysis of participants covered by retirement plans through The Principal, who attended a one-on-one meeting in 2011, found that 92% agreed to take a positive action and 80% completed the action. The top actions were to increase savings rates now and commit to continue to increase them in the future.
On average, deferral rates were 9% higher among one-on-one participants compared to those who attended a group educational meeting.
Nearly ten times as many one-on-one participants (19%) chose to automatically increase their retirement plan contribution as those who participated in a group educational meeting (2%). On average, one-on-one participants chose to increase their contributions by 1% each year for an average of five years.