Retirement management is often put on the back burner. Our busy schedules, limited budgets and personal desires (foreign travel, fast cars, fancy dinners, etc.) always get in the way.
Businesses can help their employees — and help themselves in the process. The ability to provide retirement benefits and help employees manage them is not only a powerful tool in attracting new talent, but also a great way to reduce employee turnover and increase retention rates.
Managing Employer Retirement Plans
The following steps can help your company offer attractive retirement plans and help your employees to help themselves:
1. Choose the right plan. The size of your company will determine the type of retirement assistance you should provide your employees. In general, however, businesses would do well to consider some type of defined contribution plan, which combine employee pay-ins with company outlays to help the pot grow larger. Many of these have pre-defined limits, although there are ways to tweak plans to allow more flexibility.
Some questions business owners should ask when deciding on a plan type include:
- Do I have the ability to contribute to my employees’ retirement plans, and what kind of contribution can I afford?
- What do I expect my to contribute, and how will I get them to participate?
- Do my employees prefer traditional retirement plans or more flexible options that allow them to dip into their personal funds?
Answers to these questions will help you decide on the best type of plan for your business, whether that be an in-house or multiple employer 401(k) plan, profit-sharing scheme, or — with the help of an experienced advisor — create a plan all your own.
2. Consider all of your resources. Sifting through retirement plans takes time. Fortunately, several resources are at your disposal.
It may not be any more entertaining than watching C-SPAN, but the federal government provides some helpful and accurate resources for getting started with building a retirement plan. The Department of Labor provides a primer that can prepare you ask the right questions when seeking reputable service providers to manage your retirement plan.
Next, seek out retirement plan management professionals to help you get your program on its feet. A good advisor is one with a reputation for honesty, expertise and experience. Look closely at their fee and compensation schedules, and make sure they are willing to participate in investment education and plan promotion at your business.
3. Know the laws. Retirement isn’t all mojitos and golf courses. It takes work, planning and commitment. For businesses, compliance with tax and employment law regulations is even less like a day on the fairways. Failure to comply with requirements such as disclosure filings and nondiscrimination testing can cause heaps of trouble both for companies and the future retirees contributing to their plans.
Online resources such as the DOL’s eLaw webpage or the IRS’s Retirement Plan Navigator can help, but the best advice comes from experts who know your business. In addition, hiring a professional retirement benefits specialist can remove much of liability associated with plan management.
4. Educate your employees. The more educated your employees what they need to retire and how to attain it, the more likely they will be to invest in your company retirement plan. Providing retirement plan orientation sessions as well as individual sessions or having an investment advisor make periodic on-site visits can all be effective educational initiatives. Once plans are in place, having refresher meetings is still a good idea, especially to help newer employees who may not have been around when the program first began.
Not every company needs a retirement plan, but those without them are running the risk of losing employees to those who offer better benefits. With the help of experienced advisors and benefits management outsourcing, even smaller, growing companies can compete with larger organizations. When employees know you care about their futures, the present becomes a much better place to be.