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IFEBP: Retirement Savings a Key Factor in Financial Education

Preparing and paying for retirement is a key factor behind employers providing financial employees with financial education, and in motivating those employees to take advantage of it, says a recent study.

In “Financial Education for Today’s Workforce,” the International Foundation of Employee Benefit Plans (IFEBP) provides results from its 2018 survey of corporations, multiemployer trust funds, public employers and government entities concerning their retirement and financial education offerings to employees and participants.

On the Pulse

Respondents have their fingers on the pulse of employees’ interest in preparing for retirement, the IFEBP found, which has led to a majority contending that trouble saving for retirement is a common challenge facing participants, In fact, only one such challenge ranked higher than that — credit cards and debt.

Not only do they “get it,” many respondents — one-third, in fact — say they feel responsible for providing education on pension and benefit options, encouraging saving for retirement and helping participants become financially literate money managers.

An Apple for the Teacher

Financial education is relatively new, at least among IFEBP respondents — 61% of organizations say they have offered financial education for 10 years or less, and 43% have done so for six years or less.

So what are they offering in those programs? Three of the five most common topics they address are related to retirement:

  • 68% offer retirement benefits
  • 54% offer pre-retirement financial planning
  • 37% offer retiree health care

And how are they providing that education? The IFEBP found that the most common education methods among their respondents were:

  • voluntary classes and workshops
  • free personal consultation services
  • retirement income calculators
  • internet links to informational sites
  • projected account balance statements and/or pension benefit statements

And respondents say that the most effective financial education methods are:

  • free personal consultation services
  • voluntary classes and workshops
  • projected account balance statements and/or pension benefit statements
  • new hire/participant orientation
  • retirement income calculators

More than a third of the respondents said they customize their financial education program for specific groups, with one-sixth targeting it to life events and 83% targeting employees nearing retirement. And just over a quarter use participant data to project upcoming retirement trends in their workforce.