A trick to boosting employee engagement in your retirement plan

The employee engagement window

As a recordkeeper, we want to help people save for their retirement goals. But even with the growth of auto features, we need to engage participants to help them move the needle. So we took a look at our participant base and discovered something important: People are most engaged in their plan in the first three months after enrolling. This revelation can help not only recordkeepers, but also plan sponsors take advantage of this critical window to get people saving more.

Helping people to save more with automatic increase

Having enough money saved for retirement is the top financial concern for many people, including those who are ages 36 to 50, divorced/widowed, and have $50,000 to $99,000 in annual income.¹ Plans that offer automatic increase—a feature that automatically bumps up a plan participant’s contribution rate each year—help give those people an extra nudge to save more. If your plan offers automatic increase, how do you help people to understand the benefits and take advantage of it?

The answer: Consider promoting automatic increase within the first three months after people join your retirement plan. 

63% of participants who signed up for automatic increase did so within the first three months of joining their plan—52% signed up at the same time as enrolling in the plan.¹

As your employees are about to become eligible to enroll in your plan, make sure they know:

• Automatic increase is an available feature, and how it works
• The long-term benefits of saving incrementally more each year
• How they can sign up

Promoting consolidations to help simplify account management

People change jobs throughout their careers and often accumulate retirement accounts at each stop. To help minimize the complexity of managing several retirement accounts—or more—it’s common practice for people to consolidate older retirement accounts with their current one. There can be several benefits for participants such as:

• One phone number to call with questions
• Potentially lower fees
• A comprehensive view of retirement savings and progress
• Simplified estate planning, which can help make it easier for beneficiaries

86.5% of account consolidations (i.e., rollovers) occur within the first three months after participants enroll in the plan.²

Participants join their new employer’s plan and, while already sorting through enrollment forms and contribution decisions, take the extra step to combine their old accounts. This gives your employees the information they need to combine their accounts when they enroll in the plan to get the best results.

Highlighting the value of managed account products

As people get closer to retirement, their financial situation can become more complex, and the value of professional investment management likely increases. Other people just prefer to have help when it comes to selecting and managing their investments. Managed account and investment advice products offered through retirement plans can help people manage their money to and through retirement.

When do you think participants are most likely to take advantage of these advice products? You (probably) guessed it—in the first months after they’re eligible to, typically corresponding with enrolling in their retirement plan. 

64% of those using in-plan advice products signed up for them within the first six months after becoming eligible to do so. Only about a quarter (24%) of people signed up a year or more later.³

The same theme applies to engagement in these products. The people most responsive to outreach communications are those who signed up for an advice product within the past year.³

Journey-based outreach can push engagement over the edge

Knowing when to engage with your employees is one thing, but having a strategy for how is different. Consider meeting participants where they are in their retirement planning and financial journey. Let’s look at how your messaging for automatic increase, for example, may differ between employee demographics.

Younger employees—Focus on the importance of compound earnings and instilling good financial habits early in their career.

Older employees—Encourage people to take advantage of their catch-up contribution with incremental increases in their savings rates.

Employees not receiving the full company match—Showcase your plan’s employer matching contribution and give people another way to gradually take advantage of the full amount.

Employees saving below the 2023 $22,500 annual limit—Remind people that they can save more and show them how they can take small steps each year to get there.

Communications tailored to the recipient’s situation may give people the personalized insight that motivates them to act. 

Momentum can drive retirement plan engagement 

People already experiencing change and facing decisions, such as enrolling in their retirement plan and making related choices, are likely more open to additional features and services. They’re already in a decision-making mindset, so what’s one more thing to consider? That’s why it’s important to engage with them as they’re about to join your retirement plan—and immediately after—and make sure they understand all it has to offer.

Once that window of opportunity closes, one side of Newton’s first law kicks in—an object at rest tends to stay at rest. But if you give your employees the resources and information they need while they’re excited to save for retirement, the opposite side of the law can create momentum—and an object in motion will stay in motion.

1 Active John Hancock open-architecture 401(k) participants as of 12/31/21. 2 Active John Hancock open-architecture 401(k) participants as of 8/31/22 who completed an account consolidation since 1/1/16. As other options are available, such as leaving it in your old plan, rolling over to an IRA, or cashing out, you are encouraged to review all of your options to determine if combining your retirement accounts is suitable for you. 3 Open-architecture plan participants as of 5/31/22 who became eligible for Retirement Advice between 1/1/14 and 5/31/22. Subject to plan availability. Participation in John Hancock Personalized Retirement Advice (Retirement Advice) does not guarantee investment success. Investing involves risks, including the potential loss of principal. Fees for this service are based on a tiered schedule and vary by account balance. For more information, consult the Retirement Advice investment advisory agreement. John Hancock Personal Financial Services, LLC (JHPFS), an SEC registered investment adviser and affiliate of John Hancock Retirement Plan Services LLC (JHRPS), is the investment manager of the Retirement Advice program. JHPFS has selected Morningstar Investment Management LLC, a registered investment adviser and wholly owned subsidiary of Morningstar, Inc., to act as the independent financial expert (as defined in the U.S. Department of Labor’s Advisory Opinion 2001-09A) for Retirement Advice. JHPFS monitors Morningstar Investment Management’s performance. Morningstar Investment Management LLC is not affiliated with JHRPS, JHPFS, or affiliates. JHPFS acts as a fiduciary with respect to the management of Retirement Advice investments.
John Hancock Personal Financial Services, LLC is an SEC registered investment adviser. John Hancock Personal Financial Services, LLC, 200 Berkeley Street, Boston, MA 02116.