Participant Communications Specific to the Pandemic

Elizabeth Woodburn, with Buck, describes what elements DC plan sponsors may consider including in participant communications during the COVID-19 pandemic.

A survey Buck took after our recent webinar, “DC plans after the CARES Act—it’s not business as usual” showed that 62% of defined contribution (DC) plan sponsor attendees plan to increase their financial education communications.

And there is certainly an increased need. In this time of heightened market volatility and economic uncertainty, employees are trying to figure out what to do. They have questions about their retirement savings plan accounts and their finances in general. Some face difficult, stressful financial situations with no easy solutions, which adds to the toll the pandemic is taking on employees’ financial, mental, emotional, social and physical well-being. And because employers are a trusted source of information, employees’ natural inclination is to turn to you for answers.

Here are three areas to review as you develop your DC plan communications for the remainder of 2020.

Consider the implications of adopting the CARES Act.

With new regulations stemming from relief legislation, you’ll of course have to update required notices, documents and participant disclosures if you make plan changes. Some employers are also facing unprecedented demands for loans and withdrawals from their DC plans, so remember that if you do adopt features of the Coronavirus Aid, Relief and Economic Security (CARES) Act:

  • You’ll need to update or revise your withdrawal forms, loan forms and related communications;
  • You may need communications down the road, such as reminders about options on loan repayments and when taxes on coronavirus-related distributions (CRDs) come due in the future; and
  • As the plan sponsor, you can provide an objective viewpoint on the potential ramifications of decisions participants may make. With some of the CARES Act transactions, you have to wonder if they could end up digging themselves into a deeper hole than the one they’re trying to climb out of. For instance, the downstream effect of taking out a hefty loan under the CARES Act is that it must be repaid or treated as a distribution and taxed if it can’t be repaid—even if the employee is out of work. Communicating the pros and cons of these decisions is critical to helping employees make informed financial decisions.

Target messaging to affected populations.

Some employees may need special, targeted communication to address their specific needs:

  • Older employees:Those close to retirement, say five years or less, may be wondering whether they have time to recoup their savings losses before they retire.
  • Younger employees:Many will want to know if you’ll offer student loan relief.
  • Those negatively affected financially by recent events:People affected by furloughs or pay changes—cuts, freezes and so on—or who may be taking advantage of new loan and withdrawal provisions, will have questions about how these changes will affect their tax and savings planning.

Think beyond plan updates, to financial well-being.

The scope and speed of the pandemic means a lot of people are facing situations they never planned for, with no warning and no time to prepare. They could use extra support for their financial well-being, and plan sponsors have access to resources that could be just what the doctor ordered. Consider:

  • Addressing uncertainty about investments:As different areas of the U.S. start looking at how to reopen for business, it’s likely the market will continue to be volatile in the near term and participants will need help coping with the bumpy ride. Ask your DC plan recordkeeper and/or professional investment adviser for support—they often have a variety of educational materials available that address this issue.
  • Offering counseling:Not only are participants dealing with some of the toughest financial decisions they’ve ever faced, the shelter-in-place restrictions can leave them feeling that they’re facing those choices all on their own. Many would appreciate having a real person to turn to with their questions. Connect them with counseling resources and financial tools you have available through your recordkeeper or your employee assistance program (EAP) or other provider.
  • Expanding financial education:If they’re dealing with a change in family finances, there may be other serious financial decisions participants have to work through—which bill to pay, whether to pay down credit card debt or build up an emergency fund and other choices “between the devil and the deep blue sea.” Providing financial literacy and financial well-being education in your plan communications, though unlikely to address every nuance, will offer general principles, options to consider and ways to approach their situation.

Maybe one of the best things you can do as a plan sponsor is to reinforce a message they may not want but need to hear: The DC plan should be a last resort for getting cash. But that message needs to be delivered with empathy and compassion. Recognizing the tough spot employees may be facing, you can support them by offering suggestions on other steps they can take to address their immediate financial needs before they liquidate their hard-earned retirement savings.

Helping participants see the scope of options available to them can better position them to make sound financial decisions. And, maybe just as important at this time, you can help them feel more in control of their situation, providing some much-needed relief for participants’ anxiety and support for their well-being.


Elizabeth Woodburn is a director in the Engagement Practice at Buck, an integrated HR consulting, technology and benefits administration services firm. She specializes in developing employee communications on a broad range of financial topics, including retirement program change communication, investor education and financial wellbeing.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Institutional Shareholder Services or its affiliates.