Employer-Sponsored Retirement Plans Shouldn’t Suck. When you read as much retirement industry research as we do, you begin to notice patterns. Lately, we’ve been reading a lot about what employees want out of an employer-sponsored retirement plan, and well, in some cases, they find the benefit sorely lacking (sometimes literally).
Employees’ retirement plan wish list includes things like automatic paycheck deductions, employer matching contributions, and more education about how to maximize their savings and plan benefits. Oh, and for employees who don’t have access to a workplace retirement plan, most say they desire and would find value in such a benefit if their employer offered it.
We recently read thisfrom NerdWallet, and it got us thinking. The article details savings alternatives for employees who are less than impressed with their workplace retirement plan. To our mind, employees shouldn’t have to seek alternatives to help them save. Put bluntly, there’s no excuse for employer-sponsored retirement plans that suck. If your organization’s retirement plan isn’t that great, what message is it sending to your employees about your investment in them and their financial well being? In our opinion, if your retirement plan sucks, and employees are looking elsewhere for opportunities to save for their future, you need to try harder and do better.
What’s more, all employees should have access to an employer-sponsored retirement plan, even those who work for small businesses. It’s getting easier and more affordable for businesses of all sizes to offer retirement plans for their employees, and really, is there a better way to attract top talent and show your current employees how much you value and appreciate them? If you said, “how about pay raises?” well, yes, that’s certainly a good option, but here’s some research that might make you think differently. A 2015 Glassdoor study actually found that employees who don’t currently have a retirement plan at work would prefer their employer offer one instead of giving them a salary increase. That’s some pretty telling data about what today’s workers need and want in a benefits package.
So what should plan sponsors do? First, take a good, hard look at your retirement plan. Be brutally honest: does it suck? If you were looking at it from your employees’ point of view, would you find it to be lacking? Where can you improve?
There are turnkey, low-cost options out there for add-on features, from automatic payroll deductions to employee education programs. You just have to shop around to find what’s going to work for your organization, your plan, and your employees. Again, to be blunt: if you’re not offering the best retirement plan benefit you can, that’s not what’s best for your participants, and that means you’re not doing the best you can as a plan fiduciary. If you evaluate your plan — which you and your retirement plan committee should do annually anyway — and you spot areas for improvement, do something about it. Don’t just sit back and think to yourself, well, we’ve got a retirement plan. It’s good enough. It may not be, and your employees need and deserve more.
Related to that, another way to improve your plan is to survey your employees and if possible, consider implementing changes based on the findings. Ask them: What do they want? What’s keeping them up at night from a financial and retirement planning perspective? What could you do better? And if you’re getting the same questions from employees about the plan over and over again, those are areas to pay attention to, too. Could you step up your education efforts? Do they need more personalized guidance? Again, think about what you can do to help them make the most of the plan and improve their outcomes at retirement.
Finally, if your company doesn’t sponsor a retirement plan, read. It discusses five good reasons why small businesses should offer their employees a retirement plan, and what’s in it for both sponsors and employees.
So again, employer-sponsored retirement plans shouldn’t suck. There are too many good, competitive offerings out there, along with many professionals dedicated to helping you design your plan to be the best it can be for your money. And yes, it may cost your organization a bit up front to upgrade your plan, but at the end of the day, you’re doing something that helps and supports your employees, and, hopefully, increases their overall satisfaction while providing an opportunity for them to have a better retirement. It also makes your company and benefits package more attractive for potential new hires. Being able to recruit top talent and retain happy, loyal employees can only help your organization grow and thrive. We think you’ll agree, that’s well worth the investment.
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