Encouraging employees to boost their contributions to their 401(k) plans is not just about securing their financial future; it’s also a strategic move for employers looking to support their workforce’s long-term well-being. By actively promoting higher contributions, employers can foster a culture of financial responsibility and stability within their organization. This can lead to greater employee satisfaction, retention, and productivity, as employees feel more confident about their financial futures and less stressed about retirement planning.
Moreover, boosting 401(k) contributions aligns with employers’ interests in attracting and retaining top talent. In today’s competitive job market, offering robust retirement benefits and opportunities for financial growth can set employers apart as employers of choice. By demonstrating a commitment to employee financial wellness and providing the tools and resources needed to increase 401(k) contributions, employers can attract and retain high-performing employees who are motivated to contribute their best to the organization’s success.
At the conclusion of a TPSU program held on the campus of Nova Southeastern University, Fred Barstein, CEO and founder of TPSU, interviewed Ben, the country manager for a company with about 1,000 employees globally and 120 in North America. Ben discussed how they encourage employees to boost their 401(k) contributions through auto-enrollment and a matching program where employees must contribute 5% to receive an 8% match. Ben notes a 99% participation rate and emphasizes the importance of employee participation in retirement planning, given the shift away from pension plans. He highlights the role of the company and its committee in encouraging employee participation. The conversation underscores the importance of employer involvement in retirement planning and understanding the programs available.
Read the Full Transcript Here:
Fred Barstein:
Greetings. This is Fred Barstein, CEO and founder of TPSU here on the campus of Nova Southeastern University where we just completed a TPSU program and I’m here with Ben. Ben, okay if we ask you a few questions?
Ben:
Sure.
Fred Barstein:
Tell us a little bit about how many employees, your role at your organization.
Ben:
Our company has globally about 1,000 employees and in North America we have about 120, which is in South Florida and Washington.
Fred Barstein:
And your role is?
Ben:
My role in the company is I’m the country manager for both the US and Canada so I-
Fred Barstein:
You’re the manager on that. Great. So one of the things you mentioned during the program we’re doing our what’s working and not working is you have a way to help encourage people to boost their contributions. How do you do that?
Ben:
So we do it two ways. We obviously have auto enroll, that’s number one, and it goes into a time-date fund, but also it’s the way that our match works. So the way that our match works is we’ll give employees, eligible employees, 3% of their base salary and we’ll match up to 8%. But in order to get the 8%, they have to give 5% in contribution.
Fred Barstein:
I see.
Ben:
So that’s the incentive.
Fred Barstein:
There. And how’s that working?
Ben:
So far it’s working well. We have about a 99% participation rate and out of all the employees, we only have three that aren’t up to the 8%, but they’ll get there.
Fred Barstein:
You’re getting there. That’s pretty good. Employees are happy about that and they understand, “To get the match, I got to do that.”
Ben:
They understand and we communicate that to them every quarter after our committee meetings that to get the 8% they have to contribute the additional five.
Fred Barstein:
Final question, Ben. A couple of things you picked up here today at the program and would you recommend this program?
Ben:
First and foremost, I would recommend the program, but also it solidifies the knowledge that you have to contribute to a 401k program or a defined contribution plan. It’s imperative because the days of companies offering pensions are pretty much gone.
Fred Barstein:
Yeah.
Ben:
They’re over. And as we migrate into a defined compensation program, it’s imperative that the employee participate to be comfortable in retirement.
Fred Barstein:
And it’s imperative for people like you to understand how to encourage them and know the program.
Ben:
Absolutely. It’s really the role of the committee and the company to encourage employees to participate in the program for their benefit and their future.
Fred Barstein:
So they don’t have the liability anymore on defined benefit plans with defined contributions, but maybe they have the responsibility to help their employees-
Ben:
Correct. Absolutely.
Fred Barstein:
To do that. Well, great. Well thank you for attending-
Ben:
You’re welcome, Fred.
Fred Barstein:
The program and thank you for watching 401k TV.
