Retirement plan executives and researchers say the best way sponsors can encourage participants to save more and save earlier is to keep the message simple.
However, making it simple can be difficult, said several speakers at the recent Global Future of Retirement conference in New York, sponsored by Pensions & Investments.
"If you don't get them in the first sentence, you've lost them," said Bernard "Bernie" Knobbe, vice president, global benefits at AECOM, Los Angeles, during a June 27 panel discussion, "Bridging the gap between financial education and financial literacy."
Mr. Knobbe said sponsors must become more aware of participants' specific circumstances. "We have to put ourselves in the employees' position," he said. "It's about awareness. We need to enable employees to put things together."
Matt Leckrone, Charlotte, N.C.-based senior vice president, total rewards, for Compass Group PLC, agreed that sponsors must tailor communication and education campaigns to specific audiences. For example, Compass Group has many hourly employees, so its financial communications focus on spending. "They need help with spending," he said. "They have to manage spending to live within their means."
Sponsors' education campaigns should focus on "age-appropriate and gender-appropriate" presentations, said Olivia Mitchell, executive director of the Pension Research Council at the Wharton School at the University of Pennsylvania, Philadelphia.
Better yet, society shouldn't wait until people have a job to get a financial education that improves financial literacy, she said. "Start in the schools," said Ms. Mitchell, noting that several states mandate financial literacy courses in high school.
Utah, Missouri, Tennessee, Virginia and Alabama require high schools to provide personal finance education courses, according to a 2015 survey by the Center for Financial Literacy at Champlain College, Burlington, Vt.
Communication simplicity can be as simple as adjusting enrollment forms, said Warren Cormier, CEO of the National Association of Retirement Plan Participants and CEO of Boston Research Technologies, during a keynote address June 27.
For example, he advised removing generic pictures of people sailing or playing tennis, adding more white space to the forms and eliminating jargon. These adjustments can increase trust and engagement among participants.
"A lack of white space deteriorates trust," said Mr. Cormier, adding that pictures of people within a standard DC enrollment form are "generally distracting."
Replacing jargon with "a more conversational tone" and providing "brief relevant details" instead of excessive details should make plan participants trust the material more, which in turn increases plan participation, he said.
"Trust allows people to take risks, to engage and to change behaviors that may not feel natural or intuitive."