June 1996
New wrinkle in communication: an illustrated SPD

David Langer may have inadvertently reinvented the wheel along the sometime rocky road of employee benefits communication.

His new personalized "coordinated benefit statements"(CBS), which grew out of an innocent suggestion by a client's employee, resemble what he calls "an illustrated summary plan description cutting across all benefit descriptions."

Langer's New York-based firm, David Langer & Co., includes in its CBS details about a particular company's benefits package, as well as personalized benefit values and actuarial tables for each employee without dotting every "i" and crossing every "t" - something SPD's are legally bound to do.

SPD enhancer
The CBS isn't meant to replace the SPD - to which plan participants are directed for more details. The convenience is not having to weed through an array of documents to track down certain details.

"If a married male employee wants to know the health benefits currently payable to his wife and children, he has to read his group life insurance certificate, obtain his account balance in any defined contribution plan, try to decipher his death benefit in any defined benefit pension plan, and will likely be in the dark on Social Security's substantial death benefits," according to Langer.

The CBS provides instant answers: All employees would have to do in this case is turn to the death benefits section for details on what their beneficiaries will be paid currently and in each future year. Any lingering questions may be answers by an accompanying explanation of the company's death benefit provision.

What makes the document stand out from the pack is that is makes available in a coordinated manner all the benefits relating to each event that triggers benefit payments. They include retirement, death, disability, health care, ancillary coverages and termination of employment. The CBS also is personalized to the point of including the names of a participant's spouse and children where applicable.

Each statement features a table of contents for easy access to information, followed by an overview of the company's benefits package. Next up is a page of personal information about each employee, as well as a summary of specific benefit plan values. There's also an explanation of assumptions used to determine interest and mortality rates, salary scale, Social Security and other elements.

Each benefits area - from health care to retirement planning - contains its own values, explanations and actuarial tables.

Langer says he stumbled upon the idea for the CBS during his work last year with a chemical research firm in Connecticut that expressed an interest in providing detailed benefits to its 150 employees.

One worker with health problems was concerned about what would happen to his benefits in the event of his death. It later occurred to Langer that he might be on to something: Why not flesh out comprehensive details about every aspect of the benefits package for all employees?

Sparking financial planning
Since then, he has piqued the interest of a second client with about 600 employees, as well as an investment manager employing about 25 people.

Langer sees the CBS eventually serving as a way to spark interest in personal financial planning. The chemical company he has worked with, in fact, will bring in financial planners for a group seminar in the fall before making the service available on a one-on-one basis.

Does he think employees will find the CBS too long or unwieldy?

Quite to the contrary, he says: "I think by giving participants more information you're enhancing the value of the statement because they don't have to guess about how their benefits work."

Copyright, Employee Benefit News, June 1996; Vol. 10; No.7
1165 Northchase Parkway N.E., Suite 350, Marietta, GA 30067
Reproduced with permission.