Whether starting a career or on the verge of retiring, employees should save some cash for retirement. However, most employees encounter hurdles even if they join a retirement policy.
Although 65% of American employees participate in workplace retirement plans, they still don’t take care of everybody. More so, there are obstacles along the way that face active participants.
When launching a financial well-being plan that helps employees make informed decisions, most companies overlook the importance of the employer-sponsored retirement policy.
Employers can help workers prepare for the future and increase employee satisfaction by educating and encouraging employees to consider joining retirement plans.
Here are a few ways a company can improve its retirement policy.
Educate Your Workers
This study by Chicago Tribune indicates that 3 in 10 employees don’t know whether their employers provide any retirement policy. Therefore, the first step should be informing your employees about what you offer and how to plan for retirement.
Also, you can let them know about the long-term perks of starting and sticking to a savings plan. Most retirement policy providers are willing to offer free information and workshops for companies. You can consider providing education and open enrolment.
Provide An Employer Match
In the years following the dreadful 2008 financial crisis, it’s worth noting that only a handful of companies offered matching contributions for their employees. Luckily, most employers presently have increased their matching contributions.
Employers that provide matches have a high chance of offering free money to workers and, in the process, get a tax break. In addition to inspiring employees to contribute to a retirement policy, the matching contribution also stimulates them to be loyal and increases turnover.
Introduce An Auto Enrolment Plan For Employees
Nothing is more practical than auto-enrolling employees for the retirement policy. Most companies in the country are taking this route after realizing the significance of auto-enrolling.
One of the easiest ways of ensuring employees save for retirement entails auto-enrolling them after three months of employment and giving them an option to pull out if they don’t buy the saving idea.
Auto enrolling is effective because it streamlines the entire registration process. Research shows that most workers choose not to join the retirement plan due to the complicated enrolment process.
Here is where auto-enrolment becomes valuable as it helps employees in the long run. Retirement policies are much more beneficial when employees start early, as they can utilize the compound interest.
Increase Employee Contributions Automatically
Remember that it’s crucial for employees to be happy at all times so that the company can get the best out of them. In the same spirit, you can increase their retirement contributions every year to ensure they will have a happy life even after leaving your company.
For example, you can automatically increase the contribution rate by 1% each year until it reaches a predetermined cap rate of about 10%.
This way, employees will progressively save more. This increment option can be mandated by a company’s plan or be voluntary on the participant’s part.
Provide Bonuses
Some organizations are offering bonuses and profit-sharing plans. For instance, if the business achieves its revenue target, team objectives, or annual budget, the workers can get a bonus channeled to the retirement policy.
Doing this encourages workers to save for retirement and work hard towards helping the company attain its goals. Additionally, it’s advisable to give employees a personalized corporate gift whenever they hit their targets.
Provide Target-Date Investment Options
Some employees do not participate in company-sponsored retirement policies as they are nervous about making challenging investment decisions. To counter this, you can offer a target-date investment plan that increases and evolves based on the employee’s age and forecasted retirement date.
Ensure You Are A Part And Parcel Of The Retirement Plans
Studies show that about a third of small business owners don’t participate in their retirement plans. Ensure you take part in the company’s retirement plans so you can be a role model to the employees.
To Sum Up
Retirement has progressed over the last few decades, as lifetime pensions and gold watches no longer exist. The older generation could depend on their employers to provide income later in life, but today’s employees have to rely on personal savings and leverage social security perks.
As a result, a company that discovers innovative ways to help workers plan and prepare for the future will stand out in a stiff labor market. It would be helpful if you always encouraged your employees to make smart financial decisions and think about their future to live a comfortable and better life in retirement.
