In this time of increased market volatility and economic uncertainty, employees are trying to figure out what to do. They have questions about their retirement savings plan accounts and their finances in general. And because employers are a trusted source of information, their natural inclination is to turn to you for answers.

Employees are hoping you're going to do the hard work of researching which parts of the CARES Act and the SECURE Act will be meaningful and helpful to them. And they're going to take their cues from you, too, about what kinds of financial decisions are sensible and which ones they should re-think.

As the sponsor of a defined contribution (DC) plan, what you say and the way you say it will play a vital role in helping employees navigate their way through a sea of unusual financial challenges.

1. Make your retirement messages relevant to the whole person.

Typically, we communicate retirement and health plan benefits separately. But the issues participants are facing are not siloed. Financial, physical, and mental health issues are interconnected. With 78% of Americans living paycheck to paycheck, according to a 2017 study by CareerBuilder, there's a fear factor at work as they struggle with questions like "Where did my savings go?" and "Am I going to be laid off?"

Left unaddressed, these and other financial pressures lead to increased stress and anxiety, which in the long run affect physical health. In the short term, employees are distracted, less able to focus on their work, and can panic and make poor decisions about their savings accounts. So, as you build your defined contribution plan communications strategy, keep your employees' total wellbeing in mind.

2. Sync your message with your overall retirement plan philosophy.

Financially, Americans are in a fragile state. They're more indebted than ever, and that debt makes it difficult to cope with a financial crisis. So, messages about how to make sound financial decisions, and continuing to save for retirement, are not out of line and very much still needed.

But those messages need to reflect your overall DC plan philosophy—the reason behind offering the plan in the first place. Is it a retirement savings plan or an income support plan? On the surface, those might seem like conflicting ideas. But the reality is that many people and companies may now need to take a short-term view of their overall financial fitness in order to weather this storm.

Old messages about making retirement savings a priority ahead of other financial considerations, as though nothing has changed, might appear out of touch with today's reality.

So, maybe tweak that message a bit. Saving for retirement and conserving cash aren't necessarily mixed messages. At some point we will reach our new normal and return to overall messages on the importance of saving for the future.

3. Address issues stemming from this pandemic.

After dealing with the shelter-in-place work disruptions and immediate health issues, employers may only just now be turning their attention to DC plan decisions and related communications. Here are three areas to consider as you develop this year's DC plan communications:

Compliance. You may need to make updates to keep your DC plan in compliance. Many states have asked the Air and Army National Guard to help deal the with the pandemic, which means some of your employees may be called upon to leave work to serve.

So now is a good time to make sure your military leave policies are up to date. You'll also want to revise withdrawal and loan communications and forms if you adopt new CARES Act features, and create summaries of material modifications to notify employees of any plan changes you make.

Specific and targeted messaging. There are issues specific to this situation that you'll want to address:

Business decisions that you make, e.g., if you adjust your DC plan match,
Concerns for participants close to retirement—folks in this group may be wondering whether they have time to recoup their savings losses before they retire, so they may need some special handling with targeted messages,
Questions about pay, furloughs, new loan and withdrawal provisions, or taxes,
Concerns for younger employees, who may be wondering if you'll offer student loan payment relief, and
CARES Act provisions you decide to implement, which may require some communications down the road, such as reminders about loan repayment options and options when taxes on coronavirus-related distributions come due in the future.

Other financial issues to consider. You could also consider addressing these types of issues in DC plan communications:

Help participants cope with now-volatile markets. Here you can leverage communications your DC plan recordkeeper likely has already developed to address this very situation.
Encourage participants to make use of tools and resources, such as counseling resources you may have available through your recordkeeper or your EAP; having a live person to turn to with questions and concerns can help ease their anxiety and stress.
Support participants in making informed decisions by spelling out the pros and cons of certain financial decisions, such as taking one of the much heftier loans now possible under the CARES Act, a loan that must still be repaid or be taxed as income, even if the employee is out of a job. And, some participants are not facing a financial crisis; they also need to understand their options.
Think about providing financial literacy and financial wellbeing education. If hours have been cut back or a spouse has been laid off, employees may be trying to make their way through a series of which-is-the-lesser-of-the-two-evils types of choices—e.g., if I can't pay all my bills, which ones should I pay now and which should I renegotiate? What should I do first—pay down my high-interest credit card or work on my emergency fund? Again, explaining the implications of their options can help them make the decision.
Finally, consider emphasizing that the DC plan should be a last resort for getting cash. But recognizing the tough spot employees may be facing, you can help by offering suggestions on other steps they can take to address their immediate financial needs before they liquidate their hard-earned retirement savings.

4. What unspoken messages are you delivering?

As the plan sponsor, the plan design decisions you make also communicate your philosophies about good financial stewardship to employees, without a word from you.

Consider this: If you match 4% or 6% of employees' contributions, you may silently be telling participants to save at least that much in the plan. And if you phase out your auto-escalation at 10%, participants may be "hearing" it's OK for them to stop there and not consider contributing more than that to the plan, even if they can.

Your actions can speak just as loudly as your official communications. When you add CARES Act and SECURE Act features to the plan, it's something to keep in mind: What messages are you sending to your participants about which actions are OK for them to take?

Your voice counts.

We know you may have to communicate drastic measures, or other changes that require immediate attention. Tell only what you know, and be forthright and clear. And remember, the plan design and investment lineup decisions you make and the messages you communicate to participants all tell them what you think is okay in terms of actions they should take with their savings accounts and other financial decisions they may make.

You can truly help participants find their way through tough economic times by providing a calm voice of reason, resources for support that can help address their financial, physical, and mental wellbeing, and the appropriate perspective in which to make difficult financial decisions.

Your participants are listening.

Elizabeth Woodburn is a director in the Engagement Practice at Buck, an integrated HR consulting, technology and benefits administration services firm. She specializes in developing employee communications on a broad range of financial topics, including retirement program change communication, investor education, and financial wellbeing.

Instant Insights /

Your plan participants are listening: 4 ways to help them navigate tough financial decisions

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