PLANSPONSOR - December 2022-February 2023 - 13

Additionally, respondents were asked
to swipe right on their phone if they felt
engaged and compelled to act, or swipe left
if a message failed to resonate.
A particular finding, Brown says,
was that " negative messaging isn't effective.
By far, positive words and images
were better received. "
Retirement Imagery
To learn how imagery could be used to
optimize communications, researchers
presented photos from the eight prechosen
categories. Respondents preferred
" supportive " scenes-people helping each
other (50%)-and " planning " scenes such
as people working on electronic devices or
meeting with an adviser (47%).
" Images that were well received would
be older people actively engaged, [empowered,]
enjoying themselves or doing something
productive, " Brown says.
Those are images well received with
Boomers,
that
is. Millennials
consider
communications with such pictures unrelatable
and tune them out, the study found,
noting, " They are much more strongly
drawn to images showing modern use of
devices for planning. " Gen Xers, on the
other hand, though the most vocal subset
about craving more " substance " from
communications, including data, prefer
realistic photos to infographics.
Sponsors' takeaway can be to segment
participants by age and tailor messaging
to each group. " [They can]
think about
literally 'auto' everything for the younger
participants, " Brown says. After that, " it
takes a willingness to focus their energies
on those workers who are 55 and
above, especially now as we're changing
the defined contribution system from a
savings system to a retirement system. "
Capital Group partnered with Escalent
in Q4 2021 to survey and interview 2,451
U.S. adults with various employment situations.
All qualified as investors by having
at least one account, such as an employersponsored
retirement account, individual
retirement account, brokerage account or
digital investment account. -Noah Zuss
TIDBITS
The War for Talent
Of 350 organizations that offer nonqualified
deferred compensation plans, 42% said they
do so to " retain and attract executives, " up from
26% in 2020. This indicates a fundamental shift
in how they lure senior managers away from
competitors and ensure they stay.
Source: 2022 Newport/PLANSPONSOR Executive Benefits Survey
Falling Short With a DB Plan
LONGER lives, rising health care costs
and wages not keeping up with inflation
mean that even public sector workers
retiring with a defined benefit plan,
Social Security and a retiree medical
benefit could fall short of retirement
income adequacy without adding supplemental
savings, new research found.
A National Institute on Retirement
Security paper " The Real Deal for the
Public Sector: Retirement Income
Adequacy Among U.S. Public Sector
Employees " reports an individual retirement
income shortfall for participants in
the average public defined benefit plan
who pay into Social Security and will
have medical coverage. The research was
published jointly with Aon.
" The prevalence of defined benefit
plans in the public sector has led to a
perception that most public employees are
set for retirement, " the authors wrote. But
they found that a public sector worker with
a pension plus the benefits mentioned
above will still need to save 4% to 6% of pay
annually to fund an adequate retirement.
" While the combination of Social
Security, a pension and retiree medical
benefits covers much of an employee's
needs at retirement, that combination
alone is not sufficient to meet total needs, "
the paper stated. " If offered a supplemental
[defined contribution] savings plan
through their employer, such as a 457 plan,
the average public sector employee should
strongly consider setting aside additional
savings for retirement. "
The research paper calculated that,
for an average pension holder who retires
at age 62, the average target needs at
retirement-i.e., how much money he
needs when employment ends to last
through his remaining years-as 20.8
times final pay. However, in that scenario,
the worker's defined benefit plan, along
with Social Security and the retiree
medical plan, are estimated to provide, on
average, resources equal to 18.7 times the
person's final pay, data show.
Shortfalls for certain public safety
workers could be more severe, the research
found. " Firefighter[s] may have only a
20-year career and then retire from the
profession in their late 40s or early 50s.
While these workers are likely to pursue
a second career, sponsors should consider
how the baseline DB plan modeled here
could be adjusted to provide income
adequacy to these categories of workers, "
the paper suggested. -Noah Zuss
PLANSPONSOR.COM December 2022 - February 2023 13
http://www.PLANSPONSOR.COM
PLANSPONSOR - December 2022-February 2023

Table of Contents for the Digital Edition of PLANSPONSOR - December 2022-February 2023
