Study Indicates Simplicity Key to Maximizing Plan Participation
QUINCY, MA, May 7, 2007 -- While automatic enrollment is sure to have a dramatic increase in benefit plan participation, CitiStreet says recent research shows that for plan sponsors who have not opted for that feature, simple early plan communication is a major key to increasing participation.
CitiStreet said recent review of its communications over a dozen years showed that while comprehensive, detailed plan communication is valuable in later stages of the education process, too much initial information can lead to inaction and confusion among plan participants.
"The fewer decisions employees need to make, the more likely they are to enroll," said Lisa Margeson, CitiStreet senior vice president of education and communications. "In fact, we've found that removing investment decision-making up-front and defaulting employees into an appropriate fund can improve enrollment rates significantly. Once enrolled, a second tier of communication begins to help participants, if desired, choose other investments that are the most appropriate and effective for their savings goals."
CitiStreet, which made its research brief available to customers, drew upon a review of best practices and results over the past 12 years in terms of communication and plan participation. The study included materials from State Street Corp., which created CitiStreet in a joint venture with Citigroup in 2000.
CitiStreet executives attributed the increased efficacy of its communications to its Direction-for-Life focus on a needs-based approach to products and services. That commitment, across all parts of the company, aims to help increase employee participation and help them make the best decisions about their benefit plans from the earliest days of employment through retirement.
The research found that simple language and simplified processes has resulted in response rates that have been significantly higher than traditional, information-rich approaches. In one instance, the response rate doubled when a plan communication piece was simplified from five reasons to participate to just two key points.
"The typical person receives more than 30,000 direct mail pieces over 30 years," said Margeson. "It's no wonder that retirement plan communications often gets put aside or simply ignored. Sponsors and providers need to cut through this clutter with their communications to maximize participation and help employees achieve their retirement goals."
About CitiStreet
CitiStreet, one of the largest global benefits delivery firms in the United States, is headquartered in Quincy, Mass. CitiStreet has 3,000 employees at offices in Somerset, N.J., Jacksonville, Fla., Lewiston, Maine, Boston and field offices around the nation. It also has a division, CitiStreet Australia, with offices in Sydney, Brisbane and Melbourne. CitiStreet serves more than 11 million participants and administers $217 billion in assets in the United States for defined contribution, defined benefit and health and welfare plans of corporate, government, health care, Taft-Hartley and not-for-profit organizations. It also serves more than 1 million participants and administers about $15 billion in assets outside the United States. CitiStreet is a 50/50 joint venture between State Street Corp. (NYSE:STT) and Citigroup (NYSE:C). For more CitiStreet information, visit the Web site at www.citistreetonline.com.
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