Your Money


Why workers say they don’t participate in their employer’s supplemental retirement plan


According to researchers at Dartmouth College, there are three basic barriers to long-term saving, especially participating in employer- sponsored retirement programs, such as a deferred compensation plan.1


1. I don’t know where or how to start saving. 2. I don’t make enough to save. 3. I’d rather buy that xxx (fill in the blank) today.


Employers and plan providers may be uniquely qualified to help workers overcome all three.


1. Not knowing where to start Researchers found that employees can be overwhelmed by “the


process.” From daunting paperwork that comes with enrollment to the sheer quantity of questions on each form, workers often find they cannot decide and never enroll in the plan. County employers have two main opportunities to help employees


start saving. Te first is when new hires are welcomed aboard. By providing them easy-to understand information about the benefits of their deferred compensation plan, as well as streamlined forms, when they receive other benefits information, employers can show how committed they are to helping employees achieve lifelong financial security.


Tat commitment may be reinforced by asking new hires to join the plan before they receive their first paycheck. Te second opportunity is during benefits enrollment periods and


related employee events. Again, by highlighting plan participation as employees are considering other benefits, employers give them the chance to include long-term needs in their decision-making process.


2. Believing they do not have enough income Most public sector deferred compensation plans make entry easy by


allowing low minimum contributions. However, employees may not realize that.


Tey may also need help understanding how, especially early on, just a


few dollars a week invested through deferred compensation can grow to a tidy sum at the end of a 30-year career. And if the employee is disciplined enough to increase contributions every time they get a raise the potential


COUNTY LINES, WINTER 2011 57


for growth is even greater. Just as many counties are juggling fiscal restraints, tight budgets mean individual employees need to make trade-offs. By helping employees understand the advantages of deferred compensation, they may be more willing to brown-bag it or bring in a thermos of home-brewed coffee (or make other trade-offs) so they can budget contributions to their deferred comp account. County leaders can encourage this preferred behavior by modeling it themselves.


3. Not having enough self-control According to the Dartmouth researchers, the evidence shows that


employees are less likely to delay participation if they are given a plan – rather than left to their own devices. Employer programs that make enrollment and contribution increases automatic can help employees overcome their own inertia. But the Dartmouth research suggests even plan sponsors who are not ready to adopt “automatic features” can help employees find their way to a potentially more financially secure retirement – by mapping the path for them. Have materials prepared with “default decisions” already filled in. Te fewer the choices they need to make, the more likely they are to enroll and participate.


What ounty employers can do For decades, the National Association of Counties has provided a


wealth of resources that member counties can use to encourage workers to save for retirement. NACo members can access many of these resources online through the NACo website, www.naco.org. Tese tools can help counties encourage employees to overcome the three barriers to saving identified by the Dartmouth researchers. And, of course, there’s the NACo Deferred Compensation Program,


developed and provided by Nationwide Retirement Solutions and the National Association of Counties. For more than 30 years, the NACo Deferred Compensation Program has offered county employers a way to address their employees’ need for additional income in retirement through quality education, online resources and personal service. For additional information about the NACo Deferred Compensation


Program or help putting the educational resources to work in your county, please contact Lisa Cole by email at lcole@naco.org or phone at 202-942-4270; or contact Louie Watson by e-mail at WatsonL2@ Nationwide.com or by phone at 614-854-8895.


1. “How to Foster Saving and Participation to Pensions: A New Approach,” Annamaria


Lusardi, Defined Contributions Insights Magazine, July/August 2007. Author: Bob Beasley, CRC, CIC; Communications Consultant, Nationwide


Retirement Solutions (614) 854-3278, beasler@nationwide.com


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60