The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management

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Secrets to Effective Pension Communication

man with megaphoneEngaging employees with the pension plan and benefits is a persistent challenge. Many companies keep trying different mediums and methods to communicate the information and see meager results.

However, maybe the issue isn’t how we are communicating, but what we are communicating. To get your people to engage and listen to what you have to say, you need to stop talking about what you want to talk about (pensions, retirement) and start talking about what they want to talk about (day-to-day finances, debt, mortgages, kids’ education, life insurance, aging parents ...) By getting their attention on topics most pressing to them, you will get an opportunity to show them how these things impact their ability to save for retirement and the benefits of the pension. Come at them with all pensions, all the time, and they will tune out and disengage.

Not In Control

Not only do employees want you to provide greater financial education (87 per cent), they desperately need the education. Two-thirds of your people are not in control of their finances and one in four is financially distressed. By providing a more comprehensive financial education program that addresses more of the pressing concerns of your people, you can clear away the clouds of concern that clutter up their minds. This helps to engage them to listen, appreciate, and respect the company more and allows them to better focus and understand the pension and benefits.

Financial well-being is greatly impacted as well. Not only will more comprehensive education help to reduce the greatest source of stress for more than 60 per cent of people, it will also have a dramatic impact on their health and overall productivity.

Let’s face it, with fewer than 15 per cent of capital accumulation plan members showing up for retirement and pension sessions, hosting another one is not the best use of anyone’s time. If you hosted a session on debt, even fewer people would attend due to a fear of the perception people might have. One way to engage your people and get them to participate in financial education is to host an initial general personal finance session to get their attention – maybe a short session that has 10 ways you can save and do more with your money. In that session, you show how people can pay off debt faster with the same amount of money and save more for retirement through payroll deductions. They come because they want to learn how to make their money go further and you get to talk about debt and pensions.

Get Their Attention

Sometimes changing what you talk about is still not enough to get their attention. Many of your people may feel they have already heard what you have to say and no matter what you say they won’t pay attention. Bringing in an independent, unbiased third party that doesn’t sell products can help re-engage those who have given up on you.

In certain situations, there may be a lack of trust in what the company has to say or a disbelief in the pension. These challenges can be overcome by using an independent, third party, financial educator to help communicate messages about the pension.

Other benefits of having a new voice can be a higher level of knowledge and expertise in pensions and personal finance. This can increase the level of confidence among participants and help reduce the company’s exposure to liability. The company should only be providing information, whereas a third party can provide advice.

Many in the compensation, benefits, and finance world tend to have little trouble understanding numbers, charts, and graphs. For most Canadians, this isn’t the case. The Canadian Council on Learning has done a significant study that revealed that the numeracy skills of 57 per cent of Canadians are at level two or lower. This is defined as ‘a capacity to deal only with simple, clear material involving uncomplicated tasks.’ People at this level may develop everyday coping skills, but their poor literacy makes it hard to conquer challenges such as learning about pensions.

To compound the learning problem, the council found that half of Canadians had document literacy skills at level two or lower. This is defined as ‘the ability to find and use information in forms, charts, graphs, and other tables.’

It is clear that when you do communicate pensions and financial concepts, try to do so without the use of numbers, charts, and graphs.

Explaining financial concepts without using numbers, charts, and graphs can be challenging. Add in that every person’s financial reality is unique results in very few ways to connect people with the content. The most impactful way to do this is through stories. Every story allows the participant to discover a possibility and reality that is unique to them.

Real Life

A way to build and develop these stories may be to use real life examples and change the names of the innocent. This allows individuals to compare and contrast their own situation while learning about features.

A great source for relevant comparable stories is from retired employees. First-hand accounts of participating in the pension and transitioning into retirement can be quite impactful and dispel many misconceptions. This could be done by recording audio interviews and podcasting them or possibly even doing a video interview that can be shared through pension communication or a newsletter. To gain even greater participation of pensioners, you might put together a series of open-ended questions that the pensioner could answer and you could use to write a story to be shared.

Many people like to do what other people do and will go along with the crowd. If you can find a way to show that other people are engaged and participating, more are willing to do so as well.

Many times we want to tell people what they will gain from doing something in the belief that it will motivate them to take action. Interestingly, people become more motivated when there is a potential of losing something. A classic example is if you give an ape an apple, it will be very happy. If you then give it another apple, it will even happier. But, if you take one apple away, the ape will become very angry, even though it still has the first apple that it was happy with. Communicating the pension and benefits in terms of loss can result in more engagement and participation.

Scarcity

Another principle that tends to motivate people to take action is scarcity. When people know that they can have or do something anytime, they don’t. Deadlines and the possibility of not getting something (loss) motivate people to take action and create a perceived value. To get more people signing up for a pension plan may be as simple as restricting when they can sign up to only two weeks within the year. A great time to do this might be around mid-February when they are thinking about RRSPs and retirement. This makes the topic top of mind and the scarcity increases motivation. Add in the language of loss, and you will likely see a dramatic change in participation and engagement. Keep in mind that this heightened awareness and engagement can be an excellent time to deliver education.

Most times people don’t understand how much their company spends on their total compensation. Especially when hiring an employee, start with the entire compensation amount and then explain the part that is pension contributions. Then, you can help them to ‘auto-enroll’ in the pension program. For example, if their salary is $50,000 and there is a six per cent pension match, tell them their compensation is $53,000 (or more to add in the value of all other benefits). If they accept it as part of their compensation, then they will have accepted participating in the pension.

Frank Wiginton is CEO of Employee Financial Well-being and author of the book ‘How to Eat an Elephant: Achieving Financial Success One Bite at a Time’ (frank@employeefinancialeducation.ca).

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