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Defined contribution plan executives must develop targeted communications because younger participants respond to different messages than older participants, according to a survey by Northern Trust.
“This group learns differently,” James Danaher, managing director of the company’s defined contribution solutions group, said in an interview.
The crucial marketing target is participants younger than 35 because defined contribution plans will be their primary source of retirement savings, he added.
However, Northern Trust’s survey found that only 4% of plans had established “specific goals for engaging younger workers in their defined contribution plans,” according to a summary of the survey that was issued Monday. Only 24% “have strategies aimed at increasing participation by different age groups,” the summary said.
Mr. Danaher said communicating the value of a defined contribution plan to younger workers can be as subtle as changing the emphasis to “investing” from “saving” for retirement.
The survey also found:
• Plan executives said younger workers “lag their older colleagues in both participation rates and contribution levels.”
• Younger workers are “typically more receptive to new media such as social networking as an education tool.”
• Sixty-three percent of respondents said defined contribution plan participation should be mandatory, “which would have a disproportionate impact on younger workers, who enroll at lower rates than those over age 35.”
The survey, conducted from May to July, was based on interviews with 11 defined contribution consultants as well as executives from 45 defined contribution plans, which had more than $175 billion in assets and represented more than 1.5 million participants.
Robert Steyer is a reporter at Pensions & Investments, a sister publication of Business Insurance.
AUSTIN, Texas—Teacher Retirement System of Texas and three other pension funds in the Lone Star State have been ordered by the state Legislature to conduct separate studies evaluating defined benefit, defined contribution and cash balance and other hybrid plans, among other issues related to the type of plan and plan design the state might offer.