Modest slowdown in premium growth distinguishes second-quarter financial results for MPL specialty insurers
We look at the financial results for medical professional liability (MPL) insurers for the second quarter of 2022.
To reduce pension risk, many organizations offer eligible participants a limited-time opportunity to receive their pension benefit as a single lump sum payment and “cash out” their future benefit. This event is often called a “window.” The audience for a lump sum window varies and can include active employees, terminated vested participants, retirees, and beneficiaries. During a lump sum window, an eligible participant can:
The U.S. government requires that plan participants be provided with enough information in order to make a decision that is in their own best interest. If participants respond and take advantage of the limited opportunity, successful cash-outs can reduce fees and future plan liabilities. That’s where engaging communications enter the picture. Statistics show the more you educate, communicate, and simplify—the higher the number of participants who will take the offer. Generally, Milliman has seen that programs with effective communication campaigns can achieve acceptance rates in the range of 50% to 60%.
This article provides tips on the proven components of successful lump sum window campaigns that result in a win/win for you and your participants.
Your main goal is to simplify the decision-making process. You also want to ensure that participants aren’t overwhelmed with their options. To accomplish these priorities, provide impartial communications that:
Offer support. Participants will not respond if they have unanswered questions. Look for easy-to-use ways to allow participants to ask questions and get answers, such as:
Then provide these service teams with support materials, such as Frequently Asked Questions (FAQs), communication samples, and training, to prepare them to answer questions and support the initiative.
Your lump sum communication plan needs to support the U.S. Government Accountability Office (GAO) recommendations regarding the key types of information that participants should receive so that they can understand a lump sum offer.
Answer common questions. Effective communications should answer the following questions:
The purpose of having a communication campaign is to simplify the message through multiple touch-points. Don’t expect one mass mailing to do the job. Instead, announce the window, educate about the opportunity, and provide reminders about the deadline. Lastly, send postcards confirming receipt and acceptance of paperwork once participant elections are confirmed. Below is an outline of communication elements to keep the message front and center for participants.
Send this communication two to three weeks in advance of mailing the participant packages. The announcement postcard accomplishes two things:
Send participants a reminder two weeks prior to the close of the window. Historically, take-up rates increase after sending this tickler.
Put participants’ minds at ease by sending a postcard to confirm receipt and acceptance of their paperwork after elections are processed.
Participant education and election packet in one package—include everything a participant needs to know and do:
Explains the lump sum versus monthly annuity option and outlines considerations, including an example of how lump sum amounts can go up or down based on interest rates, rollover advantages, and answers to other FAQs.
Looking to increase the response rate? Go the extra mile and add these touch-points:
A successful lump sum window is supported by a thoughtful, well-planned, and well-executed communication strategy. Involve your communication consultant from the beginning so they can gather information early to develop messages to help participants feel confident about their benefit decisions.
To see other articles in the Frozen Pension Plans: The Way Forward series, click here.