NEW YORK -- Plan sponsors are reinventing their websites as many make the headlong plunge into cyberspace.
"These are amazing times we are living and working in. . . . What we are living in today is more like `Star Trek'," said Marianne DeFazio, program manager for IBM Corp.'s compensation and benefits communications. Ms. DeFazio was speaking at a July 24 and 25 Institute for International Research conference in New York on website use.
IBM is one of many companies that chose to redesign its benefits communication program, centering on the web as the link between employee and employer.
Public and corporate pension funds, deferred compensation plan providers and 401(k) plan sponsors of all sizes want to create more dynamic websites that will entice participants to conduct more transactions online, rather than on the phone or in person.
Plan sponsors are looking to save money and resources; to provide specialized tools to promote retirement savings; and to enhance communications.
Ms. DeFazio said Stamford, Conn.-based IBM has saved millions in printing and postage costs by eliminating mailings.
She also has seen a savings in resources devoted to benefits administration. "We all know the web can increase productivity and free up (human resource) employees," she said.
Others companies have seen the same result with web-based retirement programs.
Carl Klompus, head of communications and training in the HR/ Benefits Service Center at University of California in Oakland, also looked to the Internet to eliminate routine manual tasks performed by customer service representatives.
The online benefits service center also decreased the amount of paperwork by having employees complete forms online to: vote for trustees; enroll in the plans; set up plan distributions; change name or address; transfer funds; and check balances.
The university, which has $38 billion in its defined benefit plan and $6 billion in its defined contribution plans, also has a place online where individuals can order specific forms and publications related to the benefit program, Mr. Klompus said.
The up-front cost of making the leap to the online world was scary for Julie A. Reneau, communications director at the Wisconsin Department of Employee Trust Funds.
Ms. Reneau had a limited budget -- $25,000, to be exact -- and a limited number of staff members who had any idea what the web was about.
"I had never been on the Internet before. I considered it an interesting challenge," said Ms. Reneau.
So far the challenge has been met: the Madison-based fund's website cost $14,000 for an outside contractor to create. In its first phase, members of the retirement system were able to download forms and brochures, which before would have been mailed.
After the website's launch last year, the success was measured in hits. According to Ms. Reneau, the projected number of hits -- someone opening the home page -- on the site is 80,000 this year, with a total of 20,000 actual "user sessions."
The user session offers employees a specialized calculator they can use to figure how much money they will wind up with when they retire.
Generally, the administration office for the $16 billion pension trust fund completes 15,000 formal estimates per year. So far this year, 165,000 estimates have been done on the web calculator. This is another way of saving time for the fund's staff, Ms. Reneau said.
Specialized bells and whistles, such as calculators, seem to be what plan sponsors are clamoring for, as they see more of their employees surfing the web for financial advice.
Patricia Schoenberg, participant advice manager at New York-based TIAA-CREF, predicted that plan sponsor websites in the future will have a large focus on "interactivity," which would include more online calculators used by plan participants looking for the right mix of investments.
Others agree and believe plan providers, such as TIAA-CREF, are gearing up to offer greater interactivity.
Advice and more
Plan sponsors also have started embracing advice as a useful tool that can be combined easily with online benefits calculators and account access.
Gary Brady, director of regulatory consulting at Boston-based John Hancock Funds, said, "By providing investment advice we will be essentially bullet-proofing our 401(k) plans (from future lawsuits)."
Conference attendees mentioned using advice tools from companies such as mPower Inc. and Financial Engines Inc.
Audi Apple, vice president-national sales at mPower, presented research on four corporate defined contribution plans that use the mPower tool. Annually, he said, there are 5.4 log-ins per participant, and a total of 62% of participants have completed full planning and advisory service using mPower.
Mr. Apple said the use of the mPower advice tool also had an impact on participant behavior, with 38% of participants changing their asset allocations and a total of 13% of participants increasing their contribution rate.
All speakers agreed that the next wave of investment advice will provide total financial planning -- guidance on an individual's IRA assets, bank accounts, etc.
Gregg Leekley, chief executive officer of online advice provider TeamVest Inc. in Charlotte, N.C., views online advice as the conduit plan providers will be using for gaining access to individuals' portfolios outside their 401(k) plans.
"It's the pipeline for future assets for 401(k) vendors," he said.
Besides being a medium for advice and education, plan sponsors also are using the web as a tool to better communicate to employees changes in their plans and other benefit information.
Andrew J. Porter, manager of employee communications at Teradyne Inc., used the web as the cornerstone of his company's communication with employees about its conversion to a defined contribution plan from a traditional defined benefit plan.
The Boston-based company offered employees a choice between the plans and offered online calculators and tools to help employees decide which plan was better for them.
"The web became the most important communication vehicle for us," Mr. Porter said.
After the launch of the new defined contribution plan, which now has $250 million in assets, according to Money Market Directory, employees had special links on their intranet site to their account balances and other informational websites. Today employees also use an online retirement modeler to gauge how much they need to save for retirement.
"We would not have been able to provide such a powerful tool before the web," Mr. Porter added.
Using the web, Wisconsin's Ms. Reneau met the challenge of communicating with a large, disparate group of annuitants, employees and employers.
The trust fund's site includes "something for every customer" within various windows targeted to all the different groups.
An 80-year-old woman participating in the focus group for the website told Ms. Reneau, "They (participants) will come in throngs." Which is music to the ears of any plan sponsor setting up an employee benefits website.