Participant Education: Actions and Outcomes

January 1996
EBRI Issue Brief #169
Paperback, 28 pp.
PDF, 418 kb
Employee Benefit Research Institute, 1996

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Executive Summary

  • This Issue Brief is based on surveys conducted in 1995 of participant-directed retirement plan service providers, plan sponsors, and workers to analyze and quantify the provision of educational material within such plans. The surveys focused on the types of educational services provided, the subject matter covered, and the impact of the material on worker decisionmaking. The Issue Brief is divided into three sections. The first section analyzes participant attitudes and knowledge regarding participant-directed retirement plans. The second section examines the services provided to plan sponsors. The final section presents an analysis of educational material provided to workers by plan sponsors and an exploratory analysis of its impact.
  • The majority of employees prefer to make their own retirement saving decisions; are not aware of the amount of savings they need to accumulate for retirement, even though the subject is often covered in educational material, and often change their behavior because of educational material.
  • The majority of plan sponsor survey respondents provided information to participants on all except one of the educational topics chosen as important by practitioners. Participants in small plans appear just as likely to receive this information from plan sponsors as those in larger plans.
  • Information on the attributes of plan investment options and explanations of the company pension plans are the topics most often conveyed by plan sponsors to participants. However, the educational topic most frequently provided by service providers is information on asset allocation. The service providersÕ second most frequently provided topic is information on estimating the income needed for retirement.
  • The impact of preretirement withdrawals on retirement income is one of the least often provided topics. This could have serious consequences for the adequacy of employeesÕ retirement income, raising a public policy concern in this area.
  • While there is no appreciable difference in the types of investment topics actually offered to participants, apparently plan size does matter in the choice of communication methods. Large plans appear more likely to adopt methods entailing sizable development costs, while small plans are more likely to utilize sales literature and individual counseling or meetings conducted by an investment manager.