Making a successful transition to cash balance using employee choice and financial education
Article Abstract:
As work patterns among employees' change, there has been an increase in the need for flexible retirement plan design. Cash balance and defined contribution plans became popular among plan sponsors that were looking for a retirement program that would be more effective in recruiting employees. Final pay defined benefit plans are very effective vehicles for providing a particular level of retirement benefits. The benefit accrual pattern in these plans results in the majority of benefits being earned in the last few years of employment. Defined contribution plans are attractive to younger workers and those who do not expect to remain with the employer until retirement. Plan sponsors continue seeking ways to gain the advantages of both defined benefit and defined contribution plans while minimizing their disadvantages. Employers offering choice must be careful in designing the alternative plan. Employers use a variety of education methods ranging from personalized statements showing benefits at retirement under each alternative to group workshops, individual software and personal financial counseling on the phone or face to face. The goals of good communication includes helping employees make informed and active decisions about their retirement; showing the change in its context; reinforcing the new employment contract; minimizing the noise; and providing information plus. Providing employees a choice of retirement plans, and financial education as a tool to make that choice, have proven to be effective and popular in changing retirement programs.
Publication Name: Benefits Quarterly
Subject: Human resources and labor relations
ISSN: 8756-1263
Year: 2000
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Employer involvement in defined contribution investment education
Article Abstract:
The article discusses personnel problems that might arise for defined contribution plan sponsors, if major corrections in the market cause older workers to postpone retirement beyond previous expectations. Human resource strategy must support a company's business strategy, so that the organization maintains a competitive advantage. Even within the benefits area, human resources functions are becoming very proactive to attract, motivate and retain employees. However, in general, human resource departments have been less proactive about retirement planning for employees. Employers through their human resource departments need to be more involved in their employees' retirement planning. Numerous surveys have found that, of those employees who received and read the investment allocation education materials, 40-50% changed their plan investment allocation mix as a result. To better manage their human resources, employers need to take a more active role in educating their employees about how to retire when they want to.
Publication Name: Benefits Quarterly
Subject: Human resources and labor relations
ISSN: 8756-1263
Year: 2000
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Employer strategies for a changing workforce: Phased retirement and other options
Article Abstract:
As the US workforce ages and companies struggle with loss of human capital, a few phased retirement programs have emerged. An integrated approach is needed for employers to cope with employees seeking phased work-to-retirement stages. To date, employers have focused on individual arrangements with key employees, but over time, the need for a systematic approach will become clearer.
Publication Name: Benefits Quarterly
Subject: Human resources and labor relations
ISSN: 8756-1263
Year: 2001
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