EASING THE WAY FOR A DIFFICULT TRANSITION
A Midwest chemical company was making significant changes to their retirement program for financial and industry reasons. The changes included:
- Freezing the existing pension plan (closing the plan to new entrants)
- Redesigning the 401(k) plan
Employees were going to have to make a one-time choice whether to: 1) continue participating in the pension plan, or 2) freeze their existing pension plan benefit and begin receiving enhanced retirement contributions in the 401(k) plan.
The company recognized the sensitivity of the issue and knew that employee communications were crucial to the process. It was important that the communications:
- Educate employees about this important, one-time election
- Demonstrate how the changes could impact each employee
- Put the plan changes in perspective, comparing the revised plans to other employer's retirement schemes
- Use the communications as part of a continuing pre-emptive strike in fending off union negotiations
Frost HR Consulting was hired to design a custom communications strategy.
Consultants developed a graphic logo and tagline for the benefit program that mirrored the company's philosophy, industry and image, called A Formula for Your Future.
Then, staff members wrote a series of coordinated items whose roll-out led up to enrollment, including:
- A memo to employees that announced company goals, the new retirement plan design features, and the upcoming educational campaign
- A brochure that addressed the retirement options and the changes that were being made to the 401(k) Savings Plan
- An employee presentation that stressed the plan basics, the rationale behind the changes, and the factors in the employees' decisions
- A separate pamphlet for the manufacturing group that compared the revised retirement scheme to the results of a chemical industry survey
- A customized enrollment form
With the assistance of the plan's actuaries, we also included:
- Personalized retirement statements that projected an employee's retirement funds in both the pension and the 401(k) plan – under both retirement decision options – so that the employee could have a dollars-and-cents idea of how each option would impact their retirement funds
- Modeler CDs that allowed employees to experiment with different assumed future earnings levels, contributions, interest rates and retirement dates, so they could see how each element would impact their retirement benefit
Each employee's decision depended on their personal situation, and Frost gave them the tools and education to better enable those decisions.
Additional resources were spent on the manufacturing group, the source of the union rumblings. To date, no union negotiations have been forthcoming. The enrollment efforts were successful, and employee and client feedback was positive.
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