How Employer-Sponsored Retirement Programs Help Inspire Growth and Productivity
While some have mastered saving for retirement, there’s an even larger group of people who’ve yet to start. It can’t be a good feeling not knowing how you’ll support yourself in retirement, or worse if you’ll be able to retire at all.
If you own a company and your employees are carrying this feeling around every day, it’s definitely affecting their productivity and performance. But imagine the alternative — employees coming to work with the security of an employer-sponsored retirement program.
Employer-sponsored retirement programs can have a profound effect on employees. Let’s dig into this a bit more below.
Why Employer-Sponsored Retirement Programs Are Beneficial
Employer-sponsored retirement programs do more than secure someone’s financial future in their later years. It gives workers a deep sense of security and comfort. They’re actively paving the way to their ideal future and their employer cares enough to contribute to it too.
In return, companies get the following benefits and the satisfaction of knowing their employees are on their way to retiring comfortably after years of hard work and dedication.
They Support Employee Wellness
Stress, in general, can be detrimental to a person’s health and wellness. But financial stress might be the most harmful. Think living paycheck to paycheck not knowing where your next meal will come from. Or, just being able to cover your bills but wanting so badly to save for the future.
It’s stressful. And stress can impact employees’ physical health, leading to conditions like obesity, diabetes, and hypertension. It can also destabilize their mental health, inciting anxiety, burnout, and severe mood swings.
An employer-sponsored retirement program can relieve a lot of financial stress because it offers employees an avenue to a better financial future. By relieving that stress, employers are supporting employee wellness.
They Fuel Retention Efforts
Getting employee loyalty these days is a lot more difficult, especially with the workforce being in the midst of the Great Resignation.
Low pay, nonexistent development opportunities, feeling unappreciated and disrespected at work, and a lack of retirement and other benefits have all been a part of the conversation about why employees aren’t staying with companies.
Creating a positive workplace culture and coupling it with a good employer-sponsored retirement program can attract top talent and keep them with a company long-term, fueling its retention efforts.
They Improve Employee Performance
Remember that feeling of security we touched on above? Well, imagine every employee coming to work with that feeling.
Considering how unbearable financial stress can be, the security that an employer-sponsored retirement program brings probably lifts a huge weight off employees’ shoulders. So much so, they can focus entirely on work and put their best foot forward each day.
As a result, their performance improves, and that, in turn, fuels company success.
Tips for Companies Wanting to Provide Retirement Programs
The growth, productivity, security, and wellness-related benefits that employer-sponsored retirement programs offer convince many companies to start or expand theirs.
As admirable as this is, it’s essential to make sure it’s done right. Although this isn’t an exhaustive list, starting with these tips is most effective if your company wants to offer a retirement program.
Talk to Existing Employees
You could go by what you think your employees want in a retirement program. But this almost guarantees you’ll miss the mark because you aren’t your employees. Only they can tell you what they truly want and need in a retirement program.
So, talk to your existing employees about your retirement program. If you already have one, ask them what they like about it and what could be better.
If you don’t have one, sit with your employees to flesh out what they would want in an employer-sponsored retirement program. For example, what kind of plan options do they want? How much are they expecting you to contribute?
You should also find out what additional education or resources they’d want to help them take full advantage of their retirement plan.
For instance, they may want workshops that help them set up and navigate their retirement plans. These workshops could also cover how employees can make the most out of their retirement planning with individual actions, including what to do if they are not on track for saving for retirement. Ideas to cover could include increasing their contributions, not taking early withdrawals, and opening a high-yield savings account in addition to their retirement account.
Explore Various Plan Options
After talking with your employees, move on to choosing plans to offer them. Explore various plan options to ensure you’re making the best choice for your workforce based on their needs and interests. For example, the tax laws applicable to retirement income differ by state and will probably influence which types of programs your employees are most interested in.
The following are some of the most common employer-sponsored retirement programs:
- 401(K) — a retirement plan that allows employees to contribute a portion of their income to the account and employers to match or make a contribution as well.
- 403(B) — this plan is like a 401(K) except it’s specifically for employees of public schools or tax-exempt organizations.
- Pension — employers contribute to a pool of money that’s set aside for future payments made to qualifying employees from the day they retire.
Companies should work with a certified financial planner, business benefit advisor, and/or legal team to figure out which plan is best for their operation and employees.
Once companies settle on the plan or plans they’ll make available to their employees, make sure there are measures in place for them to properly protect themselves and their retirement funds from external threats and bad-faith actions.
Conclusion
Many companies look at the expense of a retirement program and find every way to avoid it. These companies are also the ones looking for ways to inspire growth and productivity in their employees. Relieve their financial stress and give them a pathway to their ideal retirement situation, that’s what inspires the above.