How to Encourage Employees to Join Your Retirement Plan

You've done the research and you've seen the statistics: more than 90 percent of American employees value a 401(k) or similar retirement plan as an important benefit—and more than 4 in 5 agree that retirement benefits offered by a potential employer would be a major factor in their decision-making on whether or not to take a job.¹

You've made the responsible decision to offer employees a retirement plan to save in, but how can you encourage them to enroll, begin saving, and make the most out of their plan? The most effective retirement plans include features that make it as easy as possible for employees to get started on the path to retirement readiness and can automate the process for them.

There are a wide variety of retirement plan design features and options you can utilize to encourage employees to join your retirement plan. Here are five to look for:

Five features to utilize for an effective retirement plan

Automatic enrollment

Signing up for the plan should be easy for employees, and they’ll be less likely to begin saving if they have to actively enroll in the plan instead of being automatically enrolled. Auto enrollment is a simple way to eliminate any psychological barriers that may prevent employees from saving because enrollment is—you guessed it—automatic, and employees who want to opt-out of the plan will have to proactively do so.

Additionally, legislation outlined by SECURE 2.0 will require most newly-established 401(k) and 403(b) plans to include the automatic enrollment feature beginning in the 2025 plan year.

Read more: SECURE 2.0 Requires New Plans to Contain Automatic Enrollment Feature

 

Automatic increase

Similar to automatic enrollment, automatic increase will automatically increase participants' contributions by a certain percentage each year (usually 1 percent) until they reach a pre-determined maximum contribution rate. This feature helps employees both accelerate their retirement savings as well as overcome inertia—which can be a major barrier for employees trying to successfully save for retirement.

 

Managed accounts

Employees want to feel confident in their investment selection, but most don’t have the financial background to feel confident in choosing the best investment lineup for them amongst a portfolio of thousands of options. Managed accounts can help offer participants peace of mind in knowing their investment decisions are aligned with their retirement goals and provide them with a more hands-off approach to investing. This plan feature also increases the probability that employees’ retirement savings goals are reached because most everyday people aren’t investment experts, so it can be confusing, overwhelming, and easy to choose the wrong investment options when the lineup selection is left up to them.

 

Payroll integration

Integrating your retirement plan administration with payroll has advantages for both you and your employees. You’ll benefit by reducing the risk of missing a request or incorrectly processing a change and save time by eliminating the need to daily monitor recordkeeping reports and payroll change/transaction emails. Additionally, payroll integration gives your employees the confidence that any changes they make to their account will be executed in a timely and accurate manner.

 

Financial wellness programs

According to recent studies, more than 3 in 4 employees say that having a financial wellness program available to them is somewhat or very important—yet less than 25 percent of employers offer one.¹ Some retirement plan providers include financial wellness programs as part of their available offering to help participants understand how their day-to-day financial decisions could impact their long-term goals.

 

To learn more about the plan offerings, features, and plan design options available to help get your employees actively engaged and saving in your company’s retirement plan, contact us today at 800-345-6363.

 

Sources:

¹”Post Pandemic Realities: The Retirement Outlook of the Multigenerational Workforce" Transamerica Center for Retirement Studies, 2023. https://transamericainstitute.org/docs/default-source/research/post-pandemic-retirement-realities-multigenerational-workforce-report-july-2023.pdf