Case Study: Defined Contribution Plan Deferral Patterns

Defined Contribution Plan Deferral Patterns


Challenge

The benefits director at a large national entertainment company noticed on a recent record keeper report that the average defined contribution (DC) plan deferral percentage for mid-career personnel had decreased since the prior year. This was unexpected since the client had recently had the record keeper conduct optional in-person sessions on retirement savings. The client was concerned that employee savings would be insufficient as this group approached retirement age, and wanted to investigate the reasons behind these decreases to be able to promote higher savings and engender confidence in retirement readiness. 

Our Consulting Strategies

Sibson conducted an employee engagement survey that isolated the mid-career population. Part of the survey involved reviewing these employees’ DC plan queries.  The results showed that mid-career hires in the Northeast were more disengaged than other groups in the organization, which is not uncommon for the “sandwich generation.” Because of their disengagement, they had elected not to participate as actively in their DC plan and decided to spend their money elsewhere.

Sibson worked with the organization to conduct focus groups to develop a personalized retirement readiness statement for this cohort (see the sample below). The statement provided a complete view of their current outlook across all of their retirement plans (DC and defined benefit), and incorporated scenarios detailing the impact their deferral choices would have on their future retirement savings.

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The Value

Because this client viewed Sibson as an independent trusted advisor, they gave us access to multiple data sources. Because of this, the personalized retirement readiness statement was able to provide a more all-inclusive view.

This enabled employees to more fully understand their situation. Those who were on the right track felt more engaged and confident about their retirement planning, while those who were less engaged were reminded about the organization’s valuable DC plan benefits.

The client is now considering an additional communications campaign and a follow-up engagement survey to understand how their response to the problem that Sibson identified affected their employees.

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