Benefits education is not as prevalent as it should be, according to recent studies. These three articles highlight some of the major shortfalls employer’s face in educating participants. The benefit? Your employees may report higher job satisfaction.
Many Participants Do Not Understand Fees
More than half of participants surveyed do not understand retirement plan fees, indicating a need for education before the fee disclosure regulation goes into effect this month.
The Employee Retirement Income Security Act (ERISA) 404(a)(5) regulation requires plan sponsors to provide fee information to participants by August 30. According to the bi-annual Defined Contribution Investor Survey from State Street Global Advisors, 61.8% of participants said they do not understand fees.
When participants receive their first statement reflecting the new fee disclosure regulation, they may have a strong reaction to the fees listed, even though these are fees they have always paid (see “Participant Education Needed Before 404(a)(5) Deadline”). This reaction could be based on a lack of understanding, Jake Winegrad, adviser at Moneta Group, told PLANADVISER.
“People don’t like paying for something that they don’t understand,” he said.
The survey also found that while 40.1% want to understand fees, only 18.7% said they would use that understanding to inform their investment choices.
Winegrad said that although he fully supports the regulation, he is concerned that the participants who carefully read their statements might begin making investment choices based solely on fee amounts. “There are many other factors that need to go into your investment election decisions,” he cautioned.
Benefits education can help declining morale
Since 2008, employee morale has fallen each year, but as this year’s benefits enrollment season approaches, it gives employers the opportunity to improve employee engagement, according to Unum’s recent survey, which was conducted online by Harris Interactive.
In fact, the survey reveals that 28 percent of respondents report a decrease in morale since 2011, and barely half – 55 percent – of respondents say they would stay with their employers if they were offered the same pay and benefits elsewhere, representing a seven-point drop since 2008. Another 52 percent of respondents say their employers offer very good or excellent places to work.
The economy seemingly is impacting responses as one in three respondents say they do not feel financially secure, and more than one in four reports feeling less financially secure than last year. Nearly half of respondents say they are unsure whether they have enough money to take care of future expenses.
Employers Could Improve Benefits Education
Employers continue to spend too little time and fewer resources for helping employees understand their employee benefits, a survey from Unum shows.
Twenty-eight percent of employees who were asked to review their benefits in the past year said the benefits education provided by their employers is fair or poor. Only half of those employees said they received printed information or brochures, down from 70% in 2008.
Just over one-third of those employees were offered a chance to attend an information and question-and-answer session about benefits, down from 52% in 2008. The percentage of employees who had access to a toll-free number to speak with a benefits adviser dropped sharply, to 29% in 2011 from 47% in 2008.
Unum’s fourth annual survey of American workers also shows a high correlation between effective benefits education and a workplace satisfaction.
More than eight in 10 (82%) employees who rated their benefits education highly also rated the employer an excellent or very good place to work. Conversely, only 27% of employees who rated their benefits education as fair or poor also said their employer was an excellent or very good place to work.
Seventy-nine percent of those who rated their benefits education highly said they would choose to stay with their current employer even if they were offered the same pay and benefits elsewhere.
Conducted online by Harris Interactive, the survey polled more than 1,100 employed adults following the 2011 benefits enrollment period.