align=”justify”>According to an Ernst & Young and ExecuNet survey, 80% of employers feel that their education service is in place in order to retain employees, while 84% think that education is also necessary in order to make sure employees have enough money for retirement. Ninety percent claim that they put such programs in place in order to also increase employee satisfaction.
align=”justify”> For those 17% of employers who do not offer basic education, 40% cite concerns over liability for such programs as the major reason for not instituting them, according to Ernst & Young spokesperson Donna Cox-Davies. An additional 13% cite cost.
align=”justify”>Education programs that offer a more personalized approach through phone calls and other direct methods of communication seem to bring in higher levels of involvement, according to the survey. Results from employers with such personalized employee counseling services show:
- up to a 16% increase in participation rates in excess of 5%
- up to a 17% increase in contribution rates as a percentage of pay inexcess of 5%
- up to an 11% increase in the change in allocations in excess of 5%
- up to a 15% decrease in loan activity in excess of 5%
- up to a 16% increase in rollover activity in excess of 5%.
“A small percentage increase in any aspect of investment behavior, such asa change in contribution as a percentage of pay, can yield positive results for plan participants and can leave them more financially secure in their retirement,” said Bill Arnone of Ernst & Young’s Human Capital practice in a press release. “By providing one-to-one counseling, employees understand the importance of saving for retirement and can also determine the course of action that best meets their needs.”
The inclusion of personalize assistance into programs can have a greater affect on employee behavior, however. Almost half (47%) of employers who provided telephone counseling as part of their programs increased participation rates by over 5%.
Of the 83% of employers who offer some level of employee financial education, modes of delivery differ vastly, with many forms of delivery often being offered at the same company. Brochures, newsletters or print publications are used by 91.9%, while online information is used by 90.3%, personalized statements by 80.6%, and online calculators by 82.3%. Workshops (66.1%), phone counseling (33.9%), and in-person counseling (24.2%) are also popular.
Delivery frequency is also looked at in the survey, with continuous (upon request) information by far the most popular delivery frequency, with 44.9% of employers offering this. Other delivery frequencies are annually (7.2%), quarterly (18.8%), monthly (5.8%), and only at enrollment (1.4%).
Ernst & Young LLP, with the assistance of ExecuNet, a firm that specializes in executive career strategies, recruiting and employment market trends, conducted a survey of large employers nationwide to determine whether they are measuring the success of their employee financial education programs. The findings were based on responses from human resources and employee benefits professionals from a cross section of some of the largest employers in the country in a variety of industry sectors.
The survey was designed to cover basic education programs and not formal advice, which can carry a much higher level of potential plan sponsor liability.