The federal Office of Personnel Management (OPM) said in the education plan posted to its Web site that the new Retirement Readiness Index Profile should be ready by April 1, 2006. The education initiative comes in response to a 2004 law requiring the government to develop a new strategy for boosting federal employees’ retirement financial literacy.
“Workplace financial education benefits both the employer and employee,” OPM wrote in the plan document. “A more knowledgeable employee will result in better financial decisions and overall financial well-being. Employees who are taking maximum advantage of the benefits available to them will more likely have greater job satisfaction, which may result in lower turnover. For the employer, research studies have shown that employees who are financially healthy are more productive.”
The personnel agency plans to offer a Retirement Readiness Index Profile by April 1, 2006. The electronic, age-based profile will give employees benchmarks for financial and personal readiness and will let them compare themselves to their peers. The profile will enable civil servants to identify weaknesses in their retirement preparedness. For example, a 30-year-old should understand the difference between stocks, bonds and mutual funds, but need not necessarily know how to budget for retirement, OPM said. A 60-year-old should comprehend both.
OPM also plans to offer a comprehensive resource guide by July 1. The guide will link to educational materials that can be used to fill gaps in preparedness.
The agency also will begin offering a simple, one-page worksheet that employees can use to calculate how much money they will need to fund their retirement. It will take federal Thrift Savings Plan accounts, Social Security benefits and pension projections into account.
Benefits officers will attend educational workshops run by OPM on programs such as health and life insurance, long-term care insurance and flexible spending accounts. The workshops will be one-hour lunchtime events, and benefits officers will receive presentation slides and handout materials to distribute to employees. The benefits officers also will attend an annual symposium reviewing the government’s retirement programs.
The OPM retirement financial education strategy is based on a model of financial education that brings together information and training on the federal benefits programs with a broader holistic approach about what information employees need to know to achieve their retirement goals.
The OPM education model underlying this strategy brings together the basic information about the benefits provided by the government, as an employer, and the broader financial education needs of employees. Rather than being a near retirement event, the strategy considers retirement financial literacy and education as a career-long process.