by: Roxanne Fleszar
from:  401kWire
March 16, 2000

In my work I speak to plan sponsors and investment committees of plans
both large and small, spanning a vast array of industries. Yet they all
pose the same question, "How do I boost plan participation and
contributions?" My answer is always the same; put your plan on a diet. By
this I mean, set your goals and develop a strategy. To jump start your
efforts, I will focus this article on the first of three methods which,
when combined, have proven successful to my clients.

The first element is to provide employees with a working knowledge of the
plan. Don't expect this to happen by simply handing them a packet of dry
information and prospectus' of the plan's offerings. This is too easily
placed at the bottom of their to-do piles, or worse yet, right into the
recycling bin.

Take initiative to conduct initial one-on-one interviews with new hires to
explain the plan, how it works, and most importantly, how it benefits
them. Be sure to view this as an informal, information session, during
which the employee can voice concerns or pose questions about the plan,
which might otherwise not come to light.

Really pack some punch into these meetings with two key ingredients: scare
tactics and pictures. The former is important because repeated annual
Retirement Confidence Surveys by the Employee Benefit Research Institute
cite fear as one of workers' primary motivators to save for retirement.
For example, 48% of respondents began saving for retirement after watching
others struggle financially in their retirement.

Now use illustrations to put these frightening statistics into
eye-catching, easy-to-read illustrations, such as graphs and bold fact
sheets. This tactic leaves employees with hands-on facts to ponder at home
with friends and family, the people who truly shape their decisions. One
topic worth illustrating is the expected amount of income to be covered by
Social Security during retirement. For instance, currently a worker with a
$60,000 salary can expect to receive only 27% of his final pay, or
$16,200; this changes to 42% at $40,000, or $16,800; and 56% at $20,000, or $11,200.

Other good subjects are the increasing age limits for Social Security, and
the rising cost of goods and services. Best of all, include a personalized
graph to demonstrate how much savings the employee will accrue for
retirement in the plan based on current salary, number of years to
retirement, and at varying contribution levels.

This last tool is also highly effective with current employees receiving
pay raises, by demonstrating the anticipated increase in their final
retirement balance if a portion or all of their raise were allotted to an
increased contribution in the company's retirement plan.

You are probably thinking right now what an overwhelming, time-consuming
task this might be, but experience tells me that 15 minute sessions work
best to get the point across, allow for questions, and leave employees
with effective materials to serve as a catalyst for further consideration.
Materials can easily be copied in bulk in advance, and personalized charts
with formulas in place require only a few minutes to update personal
information.

Remember to watch for steps two and three in my upcoming articles, and
prepare to hike participation rates up the ladder.