For administrators of public sector retirement plans, benefits communications and financial education are a necessity that only grows with time. Gone are the days when word of mouth in the break room would be sufficient to instill in younger workers a sense of the value in their benefits. Gone, too, in most systems, are the days when a pension might meet all of their financial needs. Instead, public sector workers engage with multiple benefits options, and they need financial knowledge and tools to build a secure retirement. The payoff, when communications and education efforts are effective, comes in greater worker satisfaction and retention.
The challenge is to develop better ways of reaching and teaching public employees. At the California State Teachers’ Retirement System (CalSTRS), this means organizing the communications around employee milestones such as vesting and giving employees one-on-one access to staff counselors for a richer level of engagement.
At the Colorado Public Employees’ Retirement Association (PERA), it means creating profiles of employees who have built a secure retirement for themselves and sharing these through multiple channels. It also includes posting a financial advice and education blog to broaden the reach of the agency’s communications message across multiple demographics.
Greg Smith, executive director of Colorado PERA, says his organization constantly looks for new ways to reach members. Done right, this will help employees to be successful in their retirement planning. It will boost their level of workplace satisfaction, and that satisfaction, in turn, will make employers’ recruitment and retention task easier.
The survey of U.S. public sector workers conducted by The Economist Intelligence Unit and sponsored by Prudential demonstrates that the level of confidence in retirement benefits has a powerful connection to satisfaction and retention. This link is especially evident among younger employees. In the survey, respondents were asked how their commitment to working in public service is affected by the financial and political climate and by reports that public pensions are increasingly at risk. Nearly half (47%) say these factors significantly or somewhat affect their commitment to their employers.
Respondents aged 18 to 24 are even more likely than their older counterparts to express skepticism: 67% say their commitment to public sector employment is significantly or somewhat affected by the potential risks to public pensions.
Mr. Smith says he has seen, among the employees his system serves, views that are completely consistent with those survey findings. "I think the national narrative is very disconcerting," he says. Effective communications and education become extra important as a support system.
Outreach to California teachers
Jack Ehnes, chief executive officer of CalSTRS, which serves more than 900,000 active teachers and retirees, says his agency’s communications with teachers reinforce the message that responsibility for fixing a funding gap that opened after the 2008 financial crisis doesn’t fall solely on their shoulders. CalSTRS makes a deliberate effort to help all members understand their benefits and develop the financial literacy they need to work toward a secure retirement, says Mr. Ehnes. This communications support is particularly beneficial in emphasizing the importance of a cash balance program tied to teachers’ overtime pay and a voluntary 403(b) plan, both of which serve as supplements to the pension benefit.
CalSTRS members get information packages pegged to specific milestones, such as when their benefit vests. They are offered a series of workshops on subjects such as budgeting or how to make smart investment decisions. They also can take advantage of one-on-one or group counseling with CalSTRS staff members. This last element—the direct access to staff counselors—is a type of benefits communication often rejected by administrators as too expensive and resource-intensive. But for Mr. Ehnes, it’s too beneficial to ignore. CalSTRS staff conducted more than 24,000 member sessions last year. Mr. Ehnes sat in on some of these: "You can see people change behaviors—think about things differently—when they are in an iterative discussion with someone, not just reading something in a one-way communication."
Replacing breakroom conversation
Colorado PERA, which serves more than 550,000 current and former state workers, is challenged in how best to reach employees. In prior decades, Mr. Smith says, newer hires might have heard older colleagues talking about their retirement benefits in the faculty lounge or the break room while having coffee. They would eventually get the message that the benefit is real and important and could be relied upon, he says.
That happens less often now, and the message has been eroded as people hear the broader national debate about funding and benefit changes. In reaction to the funding hole created by the financial crisis and recession, the Colorado legislature cut pension payouts in 2010. This makes contributions to retirement savings programs an even more important complement to the pension component.
It’s "critically important" to come up with new ways to help employees see the value of public sector retirement benefits, Mr. Smith says. One way Colorado PERA is trying to replicate coffee break discussions is by regularly highlighting how an individual employee’s retirement benefits have worked out in specific cases. These personal profiles are shared in newsletters, blogs and other Colorado PERA communications.
Reaching younger workers
Administrators for public sector retirement plans often comment on the generational differences they must be mindful of if they are to reach all employees. "Millennials care about retirement security," Mr. Smith says. "But they care about it really being there—not just the concept of it, but the actual evidence that it’s going to be there."
Mr. Smith describes how his system’s initial steps to reach younger workers, such as emailing electronic versions of Colorado PERA’s newsletters, fell short. They measured the response rate and found that few people were clicking. "We discovered that it didn’t matter that we put it in electronic format," he explains. "They still weren’t reading it."
“Milliennials care about retirement security. They care about it really being there--not just the concept of it, but the actual evidence that it's going to be there.”- Public Employees' Retirement Association (PERA)
They had more success with their blog, "The Dime." The site has its own look and minimal identification as a Colorado PERA product. The blog is designed for financial education, with stories about how to find a good mortgage, how to pay off student loans and so on. It also offers rewards to keep younger readers coming back, including items on adventure travel, restaurants and music festivals. "And then occasionally we sprinkle in a little pinch of education and a little bit of information about the benefit of being a PERA participant and the benefit of accessing our 401(k) plan."
More than 65% of the blog visitors are age 18-44 and one-third of visitors are return visitors. Furthermore, The Dime’s weekly newsletter has an admirable 40% open rate, which Mr. Smith sees as evidence of the content’s relevance to their target audience. He believes that the blog builds community and gets younger public sector workers to turn to his organization as one way to build their financial knowledge.
Mr. Smith hopes the community and availability of financial literacy tools will have long-term benefits for the state. "Once people understand the program and they get some years into it, they can see that secure retirement on the horizon. It becomes a very effective retention tool," Mr. Smith says. But building up effective communication "is a long-term gig."
- 2017 Employee Financial Wellness Survey, PricewaterhouseCoopers LLP, April 2017. http://www.pwc.com/us/en/private-company-services/publications/financial-well-being-retirement-survey.html
- The Economist Intelligence Unit survey of 1,877 U.S. public service employees, sponsored by Prudential, was conducted in March 2017.
- Clark, Robert L., Professor, North Carolina State University. “Financial Education and Retirement Savings”. Presented at Federal Reserve System Conference, March 2003. https://www.federalreserve.gov/communityaffairs/national/CA_Conf_SusCommDev/pdf/clarkrobert.pdf
This article was written by The Economist Intelligence Unit and sponsored by Prudential. For more information call Prudential Retirement® at 800-353-2847 or visit PublicSector.
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