We aren’t suggesting that plan sponsors are now or would in the future use messaging that strays into the moral realm concerning retirement readiness. Instead, it may be that employees are overly sensitive to this messaging as it may have permeated a lot of their public news consumption. Accounting for the sensitivity may help.
Since we follow investing news, the recent coverage of American Alliance for Equal Right’s suit against Fearless fund account based on racial discrimination caught our attention.[1] But not for the reasons you would think. Instead, it seemed to follow a line of articles and news beyond diversity and inclusion. It seems like the tide that rose during the pandemic favoring actions to direct behavior towards a set of outcomes deemed better than others may have turned. The term “woke” as an epithet has been applied so broadly now that many people are not even clear on what it refers to anymore. But what we are clear on is that employees may be chafing from encouraged action in other areas of their life that seems to be morality-based. Will that discomfort translate into unhappiness with the actions of plan sponsors to encourage retirement readiness? Sponsors may have some options for how to continue incentivizing employees to enroll in retirement plans.
The federal government, through the SECURE Act, has helped plan sponsors encourage retirement readiness in their employees and potential plan participants. The SECURE Act 2.0, effective for plan years starting in 2023, now allows plan sponsors to offer financial incentives to increase enrollment in 401(k) or 403(b) plans, like t-shirts and water bottles of de minimus value.[2] Plan sponsors may have plans for rolling out many of those incentives in the upcoming yet.
Back in 2018 we wrote about how encouraging plan participants too much could backfire from a different angle. There we said: Since the 1990s, more and more workplaces have taken responsibility for worker health through various programs. Over time, workplace wellness moved from limiting occupational health hazards (think, mold in the air vents) to encouraging weight loss and mindfulness.” We noted the distinction between asking employees to make enhanced ethical decisions at work versus urging a morals-based approach. “Ethics are rules of conduct in a specific group. Morals, on the other hand, are principals about right and wrong conduct. The key differences: Ethics are external, morals are internal; Ethics are enforceable, morals are not. And it goes deeper than that. Ethics are agreed upon rules, and therefore, can be cross-cultural. Morals are based on individual experience and while there may be shared morals across all cultures (don’t kill your coworkers), morals don’t always allow for class or cultural variances.”
If messaging hits a moral tone, it may be rejected by employees or plan participants. Employees should be reminded to maintain the ethical standards of their industry or specific roles, such as attorneys or doctors who swear oaths to protect the public. But that isn’t the same as wellness programs.
Employee wellness programs may also want to encourage behavior that will enhance their well-being in the long term, such as the often-overlooked expense of not having dental insurance. A root canal without dental insurance is often beyond the emergency savings capacity of most Americans. We aren’t suggesting that plan sponsors are now or would in the future use messaging that strays into the moral realm concerning retirement readiness. Instead, it may be that employees are overly sensitive to this messaging as it may have permeated a lot of their public news consumption. Accounting for the sensitivity may help.
The answer may be to step wide of the potential for messaging that could be perceived of as carrying judgment-based tones. One option could be to tune internal communications on retirement readiness towards choice. We discussed active choice messaging in 2021 about opting out of auto-enrolling.[3] “… [E]nhanced active choice presents a “good” and a “bad” option, and forces users to choose… by making participants either choose a savings amount or explicitly choosing a choice … weighted to emphasize the negative fiscal implications of their choice, sponsors can help incentivize savings with minimal effort.
[2] https://www.bcgbenefits.com/blog/about-those-incentives
[3] https://www.bcgbenefits.com/blog/plan-sponsors-best-friend
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
get xpress proposal
