Obstacles to Benefits Communications

July 12, 2011

For the final installment of my four-part series, I want to focus on the last of the four key reasons why employers do not prioritize benefits education, even though the majority of employers are very eager to increase employee satisfaction with their benefits package.  These four reasons are:

  • Short staffed HR departments that are forced to triage and focus on only the most urgent issues as opposed to the longer term strategic planning that education requires
  • Concerns about legal liability associated with crossing the line into providing employees with “advice” about benefits (this week’s topic)
  • Cynicism that education doesn’t really work because retirement plan providers have struggled to increase retirement plan deferral rates despite offering online and live educational support
  • Uncertainty about the best way to actually help employees make  benefits decisions

Within many companies, upper management is in disagreement due to their uncertainty about the best way to actually help employees make benefits decisions.  I heard from an HR manager that his CEO feels it would be too “motherly” to set any type of automatic benefits enrollment features into their plan and he was at wits end trying to figure out how to increase plan participation without being able to incorporate auto enrollment.

He had brought up this dilemma during a session I was conducting on Benefits Communications at the annual SHRM conference last month in Vegas.  Since I had a room filled with HR reps from across the country, I asked if any others had run up against the same roadblock.  Paula, a Benefits Manager from the east coast, shared that she had initially encountered the same problem, so to prove to her CEO that employees wouldn’t feel like they were crossing the line, she sent out a survey.  The survey went out to all employees asking their opinion on auto enrollment and auto escalation, whether they were already participating or not.

She was thrilled to share with us that almost every employee was in favor of these two features, and once initiated, allowed her company to pass the top heavy test so that their HCEs are no longer limited to a reduced contribution limit.  She also made sure to pair the new automatic features with an educational workshop on the retirement plan.

Another employer I dealt with wanted to better educate their workforce on the mechanics of the company stock.  The CFO wanted all employees to understand how the company made money, how to read the balance sheet, and to truly understand the benefit of owning a share of the company.

His vision was ongoing worksite financial education seminars and even one-on-one consultations for every employee for both onboarding  new employees and offboarding retirees.  However, he was at odds with his Director of Benefits, who saw this as a much too expensive venture based on her annual budget.  Unfortunately, for the employees, the issue of cost got in the way of their financial education.

So, how could a small budget be overcome?

First, look within your retirement plan.  Are there forfeiture funds that could be used to pay for the benefits education that might normally have been refunded to active participants?  A $150 forfeiture refund per employee could cover a full-fledged education program that could include both on-site group workshops AND over the phone one-on-one consultations, allowing employees to receive financial education and customized attention to their own unique financial goals.

One other option is to ask your plan provider to unbundle the plan communications expenses and re-allocate a portion to topics outside of the plan provider’s typical retirement education, such as the case above with the need for advanced education surrounding the company stock plan.

So, don’t let uncertainty get in the way of giving your employees a better understanding of their benefits program.  Poll your workforce on what they are most interested in, or work with a financial education consultant who can point you to the best channel of benefits communications.  The reward will be more satisfied and financially fit employees who better appreciate the benefits program you work hard to promote.