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Tips on Offering Your Employees a 401K Plan

by BBB Staff | Nov 29, 2018 3:29:23 PM

Are you wondering how to offer a new or exciting benefit to your employees? It is very difficult to attract top talent today. Anything your organization can do to set it apart and benefit the quality of life of your employees is going to be essential. Offering a retirement plan could be one route to take. Though many older style plans were hard to manage in-house, today it is not only cost effective for companies to offer such plans, but it is one of the more sought-after options from qualified talent.

Know the Importance of Savings

A report from the U.S. Federal Reserve paints an important picture. It found that, of people age 55 to 64 with a retirement plan in place, these plans have a median value of just $120,000. Yet, most financial experts say individuals should not retire today without at least $1 million in the bank. Doing the math, this is just 12 percent of what people need to have in order to retire well.

And, if you look at the next age group, you can see just how worrisome it is. For those age 65 to 74, they have a median value of just $126,000 put away. The bottom line is clear – people need help to save for retirement. This is especially true for millennials who are now seeing the value of planning for retirement.

How to Encourage Sign Up – It's Not Always That Easy

One of the first things employers think when offering a retirement plan is that no one is really concerned about this. After all, millennials could be working for 20 to 30 more years – why do they care about this now? There are a few things to consider here. First, the sooner they start, the easier it is for them. It is up to your organization to provide an avenue to help them begin saving.

Secondly, educated, experienced professionals recognize the value of saving for the future. Many will not turn to an organization that doesn’t offer a retirement plan option. In short, not having one can mean you are limiting who applies for your positions.

Consider a few tips to help you ensure the best level of success with this type of offering.

#1: Get Knowledgeable Yourself

Invest the time in learning about retirement types and the options that may fit the demographics and interests of your team. This is critical. Even if you never handle any of the tasks related to the retirement plan, your employees recognize you as their educated leader here. They want to know you can help them make a wise decision.

#2: Host an Information Session During Work Hours

Though this is not always easy to do, pulling your team to the side for a meeting on retirement benefits during work hours ensures they attend. Just getting them to the meeting is going to make a big difference in the number of people who sign up.

#3: Choose an Investor Willing to Do the Work

Investment firms know the value of getting people to sign up for retirement accounts, but some go above and beyond in educating your team and giving them clear examples. You want them to use graphics, video, informational packets, and other insight that can help show employees exactly why they should be investing.

#4: Play a Role

The most effective way to make this benefit work for your company is to offer to match their contributions. This is free money in your employees' pockets. It demonstrates your commitment to your employees. It also offers a tax incentive for your company. In short, it helps ensure sign ups while also encouraging better loyalty to your company.

#5: Always Provide Support Along the Way

Your human resource team becomes invaluable during the sign up period. They will need information and guidance. Working alongside your financial investment firm, they will play a role in helping people to see the value of a retirement program. Be sure to offer a variety of ways for your human resource team to be available to your employees. Hold a secondary meeting. Invite spouses. Create dialogues and informational sessions for questions. Also be sure your company makes sign up easy to do. Offer online tools and management programs – the financial investment firm helps make this happen.

Following these tips, it is possible to encourage more people to sign up for your retirement accounts. Doing so allows you to offer a key incentive to bring in top talent and to maintain your employees long term. For most firms, this is a benefit you cannot skip offering.

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