Retirement plans are an important benefit to help attract and retain employees. As an employer, offering a 401(k) shows you are concerned about your employees’ future and have established a vehicle to help them prepare for their financial security after their working years.
However, 401(k)s, or any retirement plan for that matter are worthless, if the employees are not participating. To maximize participation, it is important to properly communicate and educate your workforce on their options. Investing can be intimidating for many employees, so it is important to keep it simple and convey the information in layman terms. Here are some tips to help increase plan participation:
- Keep the education ongoing. Plan options and investment funds within the plan can change, so it is a good idea to conduct a review session at the beginning of each year to explain the changes. Be sure to update the materials so they reflect the current plan, and discard old literature, so there is no confusion. Try to offer education sessions somewhat frequently to keep employees engaged and encourage participation in the plan.
- Highlight tools and resources that are available. Be sure that employees are aware of the tools that are in place that can help employees manage their accounts, such as your company’s intranet, or a retirement calculator. Furthermore, provide contact information for the benefit provider and explain how to access their website.
- Prepare employees before the presentation. Employees will be less intimidated if they know what to expect. Share an overview of what will be presented and convey why their attendance is important.
- Keep the tone light. Make the presentation more palatable and the subject matter more approachable by using clear, simple language. Do not make the session longer than is necessary, but be sure to reserve time for questions.
- Provide deliverables and action steps. Providing resources for employees to take with them after the session, such as money management tips and worksheets, can be very helpful. Be sure to end the presentation with clear-cut action steps to follow to ensure they are taking advantage of the options offered to them.
Above all, be sure to clearly provide the information that employees must know, including
- How they can sign up
- How much they can contribute
- The company’s matching policy
- Steps to setting up automatic payroll deferrals into their account
- A description of any fees
- The investment options available
- How to maximize benefits
In conclusion, employers should be diligent about educating and communicating this important benefit. Providing clear and ongoing education will increase employee participation rates and give them a further appreciation of the benefits available to them.