TOTAL PLAN ASSETS/PARTICIPANTS: $2.6 billion/13,000
PARTICIPATION RATE: 100% (mandatory)
AVERAGE DEFERRAL RATE: 14.5%
DEFAULT DEFERRAL RATE: 14.5%
EMPLOYER CONTRIBUTION: 14.5%
The Nevada System of Higher Education (NSHE) Retirement Plan Advisory Committee has heard three key messages from its defined contribution (DC) plan participants, says Retirement Plan Manager Michelle Kelley. “The first is that they live busy lives and don’t really have time to manage their retirement account. The second is that they suffer from ‘mail fatigue’—electronic and postal. And finally, for many, monitoring and managing their retirement investments is way out of their comfort zone,” she notes.
So the plan committee opted to try something new last year to engage participants. “We decided to use communications sparingly and not overwhelm our participants with too many messages at once,” Kelley says. The plan focused on keeping communications “simple, brief and relevant,” she says.
In 2014, the plan had moved to a single recordkeeper, TIAA. As NHSE, which is headquartered in Reno, Nevada, completed that consolidation, committee members got better data about lingering, basic issues such as participants who had not designated a beneficiary. So in designing the 2016 communications calendar, “We decided to embrace the basics, including beneficiary designation, asset allocation, asset consolidation and increasing the retirement-savings rate,” Kelley says.
For example, the plan now mails postcards to participants’ homes with brief, key messages such as “Update your beneficiary” and “Meet with a TIAA financial consultant,” she says. The plan also utilizes interoffice mail to distribute a semi-annual newsletter, which has a conversational tone and focuses on a single topic each issue.
“Ultimately, our overarching message is that managing your retirement is simple: You don’t have to be an expert, because we have experts available to help you,” Kelley says. “Specifically, we want to help participants break down the concept of maximizing their retirement savings into three steps. First, know where all of your retirement savings are, and what fees you are paying, and consider consolidating your retirement accounts for lower fees and administrative simplicity.
“Second,” she says, “make sure your savings are invested in line with your risk tolerance and retirement horizon, and revisit this issue annually and/or if you have a significant life event. And third, the single most important factor in driving your retirement savings outcome is the amount you save—so increase that supplemental savings amount anytime you can.”
Further, in collaboration with TIAA, NSHE is working to improve its reporting metrics on the effectiveness of participant communications. In particular, it wants stronger data on the “open” and “action” rate for written communications, and on the follow-up actions participants take after one-on-one meetings with a TIAA financial consultant. “If I have learned one thing, it’s that ‘shifting the needle’ even by two or three percentage points in this area is cause for celebration,” Kelley says.
In this first year of the project, NSHE and TIAA will collect the information needed to develop a baseline for its new reporting metrics. “In subsequent years, we’ll use this data to compare the ‘open’ and ‘action’ rates over a variety of different communication pieces,” Kelley says. “We’ll start to develop an understanding of what drives participants to take action, and then use this knowledge of participant behavior to inform our efforts to communicate with our participants.” —Judy Ward
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