The employer match in a 401(k) plan can be a very powerful tool! The Great Resignation has prompted employers to rethink their employee benefits strategies to make them more compelling and competitive. With American workers quitting their jobs in droves, employers must think creatively to attract and retain talent.
Perhaps one of the most desired perks is one that isn’t new – the 401(k) plan. Employees want this benefit, and more importantly, they want matching contributions from their employer. According to a recent Betterment 401(k) survey, cited here, 65% of workers said they could be enticed to leave their current job for one that offers a high-quality 401(k) or other retirement plan.
Meta, the parent company for Facebook, and consulting behemoth KPMG are among employers that are sweetening their 401(k) plans. Meta is raising the bar on their recruiting and retention efforts. Meta now offers a dollar-for-dollar employer match, up to $10,250, or $13,500 for older employees. Previously, Meta matched half of employee contributions up to 7% of their pay. In January, KPMG began contributing 6-8% of employee pay, up from a 25% match of up to 5% employee base pay.
This goes hand-in-hand with the proliferation of financial wellness benefits at many employers across America following the Covid-19 pandemic. The events of the past two years demonstrated how financially fragile most American households are, prompting employers to recognize the importance of financial wellness benefits and increase their offerings. In addition, 16% of employers are raising 401(k) contributions or reinstating the match this year, according to a Callan survey. Many contributions were suspended at the start of the pandemic. More than a third of workers Betterment surveyed reported that their employer began offering financial wellness benefits – including 401(k)s, matching contributions, and wellness stipends – during the past year.
Now is a good time for plan sponsors to consider how you can make your 401(k) more enticing. Can you increase or offer employer matching contributions? Are there financial wellness benefits you can deliver for employees? And as you look for ways to enhance your retirement plan benefit, encourage employees to take advantage by letting them know these new perks are available. The more compelling and competitive your retirement plan offering, the better your chances of hiring and keeping top talent, even as the Great Resignation marches on.