A policy statement is a compass guiding the entire education program, and a strategy document is a road map targeting implementation of the program, Mary Kay Leydon, director of participant communication and education at Lincoln Financial Group, explained to attendees of the Plan Sponsor Council of America’s (PSCA’s) annual conference. She said both documents increase the likelihood of attaining retirement plan education goals because it helps all parties of the education program work together, focuses the investment in the education program and demonstrates the plan sponsors commitment to employee education.
The education policy statement should include:
- Overview of the plan: Basic information, including the name of the plan(s) covered by the statement, what the plan is designed to provide and some basic language about how the plan is structured (for example, it allows employees to contribute and make their own investment choices);
- Education objective: The overall strategic goals of the plan’s education program in broad statements (for example, to help participants understand the plan’s investment objectives);
- Education philosophy: The organization’s beliefs as they relate to the plan’s education program; it should answer the question, “Why do we offer retirement education;”
- Education goals: The types of quantitative and qualitative goals that may be used to measure the success of the program—not specific targets or measures, but an inventory of methods that can be used for evaluation;
- Education planning: A review of the plan sponsor’s process of establishing an ongoing plan for educating employees, including a statement of how frequently the plan will be developed and key steps of the planning process;
- Education strategy: What will be covered in the ongoing education plan?;
- Results measurement: Specific metrics that will be used to evaluate the success of education plan and related campaigns; and
- Roles and responsibilities: Define responsibilities throughout the planning, implementation and monitoring process, including roles of the plan sponsor and any related service providers.
Leydon advised plan sponsors to consider employment law issues when creating the policy statement—there is a difference between targeting certain employee demographics and segregating a class of employees—and the statement should make no guarantees. In addition, she suggested plan sponsors may want agreements in place with any providers or advisers that will play a role in the education program.
The education strategy document is more specific and should include:
- The issues or problems: Identify what specific issues or problems the annual education strategy needs to address (for example, on average, plan participants younger than age 30 save a very small amount or nothing at all);
- The employee segments to be targeted: A primary target audience for part of the annual campaign may be participants younger than age 30 who are contributing less than 5% of a salary, but a secondary audience would be all participants who would benefit from information that would reinforce the importance of saving more;
- The communication objectives: For example, the goal is for employees to reallocate their plan assets to a more appropriate allocation given their investing time horizon;
- The education campaigns: Document the specific education campaigns to be used in the next year to achieve communication objectives addressing the issues or problems;
- The communications calendar: Outline a schedule for the different communication campaigns to be delivered in the next year; and
- The annual goals and measurement: Define how the effectiveness of the annual education plan will be measured, including specific metrics to monitor and target goals for these metrics.
Leydon said to help with creating the education strategy document, plan sponsors can start by looking at basic plan metrics such as participation rate, average deferral rate, asset allocations of participants and average participant balances. Sponsors may then want to dive deeper and look at non-highly compensated versus highly compensated participants’ savings behavior, savings behavior by employee location or by employee age.
Plan sponsors can also use industry data, such as that provided by PSCA or PLANSPONSOR magazine, to compare themselves with their peers and use that information when designing education strategy, Leydon added.
She said sponsors should document SMART goals: Specific, Measurable, Attainable, Relevant and Time-based.
Because the strategy document is more specific, Leydon conceded, it may be easier to start with that and then develop an overall policy statement.