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Empowering Pension Plan Participants Through Financial Education: Strategies for Success
Even for workers with pensions, education is needed to ensure they fully understand their benefits in order to appropriately save to supplement their guaranteed retirement income.
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By: Hank Kim, Executive Director & Counsel, NCPERSEarlier this year, California became the 26th state to require high school students to complete a personal finance course. The number of states with similar requirements has more than tripled in the past four years—a clear indication of the growing recognition of the dangers of financial illiteracy.
These critical knowledge gaps have tangible impacts on savings—and ultimately on retirement security. Last year, Americans lost an average of $1,506 due to financial illiteracy, and across generations, nearly half of Americans do not know what a 401(k) is. In the under-35 demographic of the public sector, recent data from MissionSquare found that 1 in 5 employees did not know whether they were participating in a defined benefit or defined contribution plan.
Even for workers with pensions, education is needed to ensure they fully understand their benefits in order to appropriately save to supplement their guaranteed retirement income. Increasingly, plan sponsors and administrators are stepping up to provide the education and resources needed to help workers meet their financial goals.
For example, the San Bernardino County Employees' Retirement Association (SBCERA) recently announced that it has partnered with Financial Knowledge to begin offering free financial education courses to its members. Courses are conducted by certified financial planner professionals and are designed to empower members in managing their personal finances.
“At SBCERA, we strongly believe that our members need to understand how their defined benefit pension plan fits into their broader financial picture, both during their active service and in retirement. That's why we are making it a priority to offer free financial education courses to our members,” said Debby Cherney, CEO of SBCERA.
Successful financial wellness programs or educational campaigns can be very difficult to implement. Messaging needs to be carefully crafted, partnerships need to be vetted, and resources need to be allocated effectively. For public pensions looking to launch a financial wellness program, a key first step may be looking for lessons learned from peers. NCPERS pension fund roundtables are a great place to connect virtually with fellow plan staff, ask questions, and find out how peers are tackling similar challenges.
In the November issue of The Monitor (login required), you'll find tips from the Wisconsin Department of Employee Trust Funds' team behind Wisconsin Strong: Your Financial Security—a pilot program that ran from March 2021 to February 2022. More than 18,300 Wisconsin public employees participated in the program's online financial wellness platform, which made extensive use of personalized and interactive courses, webinars, and quizzes for WRS members to learn at their own pace.
Through a previously successful campaign designed to reduce the savings gap between male and female Wisconsin Retirement System members, they realized that sharing curated financial wellness information through the right channels with the right audience could help spark what researchers would call a positive “behavior change.”
Communications teams inevitably play a key role in these campaigns. Effective engagement strategies tend to look very different depending on a plan participants' life stage—often requiring strategic audience segmentation and ongoing updates to optimize messaging.
Member engagement and financial literacy are two of the key educational themes for the 2025 Pension Communications Summit, held January 26-27 in Washington, DC. Now in its third year, this unique program provides a crucial platform for industry professionals to convene, exchange innovative ideas, and delve into best practices for both internal and external communications.
This year's agenda—curated by program directors from NCPERS Communications Roundtable—covers key topics such as crisis communications, digital media best practices, tips dealing with jargon, communicating about tough topics, and, of course, strategies to build financial literacy and engage effectively with plan participants.
Learn more about the Pension Communications Summit and register here to join us in January.
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