Celebrating 60 Years of Best Practices

Companies that implement year-round employee communications programs see measured results

For too many organizations communication of defined contribution plan begins — and ends — with the enrollment meeting. These organizations tend to think of communications as an event rather than a process. This year, the Profit Sharing/401k Council of America’s 401(k) Day 2007 campaign takes the process involved with employee communication and makes it an event! 

With all the day-to-day work already on your plate you might ask yourself, “Who has time to host 401(k) Day?” The answer is simple — you do, with the help of PSCA! There are many reasons to have an ongoing defined contribution plan communication strategy, just as you would for all other benefit programs. After all, the greater appreciation your employees have for their benefits, the more committed they are to your organization. 

In addition to employee commitment, some of the reasons to have a communication strategy for your defined contribution plan include:

• Reducing your fiduciary liability,
• Increasing participation,
• Increasing the deferral percentage among participants, and
• Improving asset allocation among participants. 

But where should a plan sponsor begin? That’s where PSCA’s 401(k) Day for 2007 comes in.

What is 401(k) Day?
Created by the Profit Sharing/401k Council of America, 401(k) Day is designed to celebrate and raise awareness about the benefits of saving for retirement by participating in profit sharing and 401(k) plans. 401(k) Day is an annual celebration spotlighting the importance of employer-sponsored profit sharing and 401(k) plans. As retirement follows work, 401(k) Day officially occurs on the Friday following Labor Day. In 2007, 401(k) Day officially occurs on September 7. For PSCA member companies in 2007, 401(k) day can be celebrated all year long! 

Throughout the year, PSCA will be showcasing best practices in plan communications. We are using 401(k) Day to showcase a true best practices approach to employee communication for PSCA member companies. 401(k) Day 2007 is designed to provide a creative, inclusive, and original best practices participant communication campaign any company can easily implement.

Identifying Best Practices Techniques
PSCA has long been committed to sharing best practices plan information with its members. Best practices in plan communication can be demonstrated through measurable results achieved by the implementation of a communications program. One way PSCA shares these best practices techniques is through the PSCA Signature Awards campaign. The Signature Awards 401(k) Day category has been an opportunity for many companies to showcase how implementing a creative communication program can significantly benefit a company’s 401(k) plan and its participants. 

In 2006, First Data Corporation received a Gold Medal distinction in the Signature Awards 401(k) Day category. They realized that the key to a winning communications campaign was to have fun, so they designed their program around the interactive theme, Can’t Win If You Don’t Play.” Each employee received a “Retirement Game” brochure at their homes that reminded them of their company’s 401(k) Web site. A “Click & Win” Web site contest automatically entered an employee in a drawing to win an MP3 player and a portable DVD player. On-site information booths provided one-on-one Web site training for new and inexperienced employees, allowing them to enroll, check account balances, diversify assets, increase deferrals, and try the many online tools and calculators. Giveaways such as water bottles, chocolate coins and a host of educational materials kept the theme going and created an atmosphere of fun. The results? In addition to increasing the participation rate from 71 percent to 81.8 percent, First Data’s campaign also achieved a 237 percent increase in 401(k) Web site visits and more than a 1,000 percent increase in use of online tools. 

Another example of employee communications success is Avaya, Inc, the first place winner in the 2005 Signature Awards 401(k) Day category. Using the theme, “Is Your 401(k) OK?,” Avaya, Inc. engaged world-famous financial adviser Suze Ormond to participate in their 401(4) Day events. She addressed Avaya’s 11,000 U.S. employees. In addition, Avaya contracted with John Wiley & Sons to publish “Avaya 401(k) for Dummies” books, which were sent to participants’ homes in advance. Fidelity also sent individual check-ups to participants’ homes prior to the event. The Avaya Benefits Team traveled to its largest U.S. locations to help enroll non-participants, encourage employees to take advantage of the full company match, and improve education. The entire 401(k) Day event was repeated in Colorado as well. Suze Ormond also met one-on-one with employees for a book signing and photo opportunity. Overall, more than 300 employees enrolled for the first time, and 1,500 employees increased their contributions. 

These are just two examples of how creative and engaging employee communication programs can raise employees’ awareness about profit sharing and 401(k) plans and encourage them to join and enjoy their benefits. Throughout the past seven years PSCA’s Signature Awards program has recognized education campaigns that are focused, innovative, and have met with measurable results. Additionally, throughout this process, best practice research would indicate that many campaigns did so through the use of on-going, year-round participant communication.

401(k) Day 2007
The creative and talented volunteers of PSCA’s 401(k) Day Committee used this experience to design the 401(k) Day program for 2007. Designing an on-going, year-round, “best practices” 401(k) Day campaign was an important consideration. Colorful and eye-catching seasonal themes using different employee faces and profiles are used for a broad demographic appeal and keep the program fresh year-round. Simple and action-oriented messages are also used to motivate and engage employees throughout the process. Targeted communication tools have been added for ease in customizing personal communications for plan sponsors to use with their participants to overcome the excuses of not enrolling or saving at appropriate levels. The overall theme is, “Make Every Day 401(k) Day” noting that, “Your Future Starts Today!” This campaign encompasses the growing process of educating plan participants and the importance of consistent messaging throughout the entire year. 

PSCA will continue to offer the Fall 401(k) Day public education for any company but has added three additional campaigns this year for PSCA members — Spring, Summer, and Winter. PSCA even provides step-by-step instructions to assist the plan sponsor in rolling out their campaign and tying useful tools to the appropriate season of the campaign. Added for 2007 are carefully crafted articles your company can use in your own company newsletter or on your company’s intranet to educate your employees about everything from the tax advantages of saving in your 401(k) plan to what they can expect during their retirement years. Member companies will also have access to participant online Web casts entitled, “Are You Retirement Ready?” These Web casts offer informative insight into the benefits of participating in a company’s 401(k) plan. In addition to motivating participation in 401(k) plans, the Web casts demonstrate the importance of starting to save early, how easy it is to contribute in a 401(k) plan, how 401(k) participation decreases participants’ tax bills, and much more. These Web casts are available for PSCA member companies’ participants in both English and Spanish. Additionally for member companies, PSCA also makes available all of the 401(k) Day print material in Spanish.
 
Attendees at the Midwest Regional Conference, March 29, 2007, will get the first glimpse at this year’s exciting look and creative approach. The official Web site for 401(k) Day 2007 will come to life on April 1, 2007.

Essentials for Best Practice Communications  Knowing your audience means that you should communicate to your participants the provisions of the plan much as you would advertise a product to this office recognizing their needs and desires. Recognize that individuals learn differently and address each topic using a variety of methods and tools including printed materials, DVD’s, CD’s or videos, which are often effective tools, especially for remote locations. Periodically hold meetings with participants to answer questions. Provide interactive, web-based education tools to further reach your audience. Most important is the need to solicit feedback from your employees to have a clearer understanding of how to reach your different audiences.

Extra 401(k) Day Tools
PSCA also provides a complete campaign including online participant Web casts in English and Spanish, posters, banners, flyers, interactive games, and more to companies and organizations that offer 457 plans to their employees. A 457 plan is a non-qualified tax-deferred compensation plan that works similar to a 401(k) plan. Tax code section 457 provides rules to govern all nonqualified deferred compensation plans of governmental employees and non-church controlled tax-exempt organizations.

Conclusion
There’s more to defined contribution plan communications that just the enrollment meeting. Best practices in plan communication show that ongoing, year-round education and communication are successful in increasing plan participation and deferral rates as well as enhancing participants’ appreciation of their profit sharing and 401(k) plans. PSCA makes ongoing participant education and communication easy with engaging and customizable tools for 401(k) Day. Check PSCA’s special 401(k) Day Web site, www.401kday.org, for more information.

Note: National 401(k) Day is supported by the nation’s leading retirement plan providers and is sponsored in part by: Fidelity Investments, John Hancock Retirement Plan Services, MFS/Sunlife Retirement Plan Services, Inc., Principal Financial Group, and T. Rowe Price Associates, Inc. PSCA would also like to thank Schwab for its donation of graphic design for 401(k) Day materials.