When Nora Alvarado says “Stay in the Family,” she wants participants in the Texa$aver 401(k) and 457(b) plans to consider keeping money in the plans when they retire rather than take a rollover into an IRA.
“Some people thought they had to take their money out when they retired,” said Ms. Alvarado, manager of health and welfare administration and deferred compensation the Employees Retirement System of Texas, Austin.
Those beliefs were reinforced by a long-standing policy of sending separation packages to employees ready to retire — a routine practice of providing retirement information that has been halted because, Ms. Alvarado said, employees may have misinterpreted the intent.
That prompted ERS to launch in March 2016 the “Stay in the Family” campaign, which illustrated the benefits to participants of keeping their money in the plans. For example, ERS identified the fees and services offered by the plan while allowing participants to make comparisons based on their own research.
“We want them to make the right decision,” she said. “We wanted them to see it in writing.”
Ms. Alvarado emphasized that ERS provides education; it does not offer advice. “We let the pre-retiree or retiree know they may take a lump sum distribution or roll over to an eligible retirement plan,” she added.
A key element of the campaign is reaching people at age 58 or 59 rather than right before they retire. “We are getting out in front of them before they are leaving,” she said.
ERS targeted communications not only to these employees but also to employees with account balances of $10,000 and higher and to retirees with balances of $50,000 and higher.
For the former, ERS “wanted to create relationships with these pre-retirees to help them save more where they can before retirement,” Ms. Alvarado said.
For the latter, “we thought they had saved so much in Texa$aver already that they would be more likely to keep their money in the plan and still benefit from Texa$aver services in retirement,” she added.
The campaign, developed in conjunction with the ERS record keeper Empower Retirement, used several media sources — a video, periodic postcards during the quarter that includes a participant's birthday, and a letter and brochure to employees ages 60-65 explaining the continued support offered by Texa$aver during retirement.
“I liked how they started to raise awareness pre-retirement and how they showcased real benefits available to people staying in the plan,” wrote one of the judges who endorsed an Award of Excellence for ERS.
“This is an important group to communicate to, and I think this has been done effectively,” another judge wrote.
Ms. Alvarado said this campaign could have implications for other DC plans that encourage employees and retirees to take advantage of the lower fees for institutional investing vs. retail investing. As for ERS employees, she wants them to view Texa$aver as an “extended family” that is preparing them for retirement but also helping them during retirement.