A Strong 401(k) Can Set Your Company Apart
The better your retirement plan, the better your chances of attracting and retaining top talent. These tips can help make your benefits package more appealing to current and future employees.
Your company’s retirement plan can help make your organization a place where people want to work. It can also promote loyalty with existing employees. Case in point: J.P. Morgan’s recent plan participant survey revealed that nearly nine in 10 people say retirement benefits are an important factor when deciding to stay with their current employer or consider a new employment opportunity.
In this historically tight job market, you may need to reimagine all the ways your company appeals to new and existing employees. That includes taking a closer look at the 401(k) plan you offer. Here are four ways you can revisit your retirement plan to help retain and attract top talent.
Benchmark for Success
You should benchmark your 401(k) plan at least once every three years. Doing so lets you evaluate your company’s retirement plan and compare it with others of similar size or industry. This will help you see how your plan’s returns, services and fees stack up in the marketplace.
You can use the benchmarking insights to adjust your plan, which could save money for you and your employees. Plus, with this information you can clearly state the differences and benefits of your 401(k) plan to prospective employees.
Promote Financial Wellness
According to J.P. Morgan’s plan participant survey, 52% of employees feel they get more retirement plan information than they can absorb. If employees don’t understand how your plan works, they’ll never know how great it is—no matter how competitive your 401(k) plan may be.
Be sure your program’s benefits are communicated clearly. This may mean working with your provider to simplify or tailor plan documents. You also should consider delivering information in easy-to-understand formats like short videos or FAQs. Scheduling information sessions for employees throughout the year to help answer questions may also be beneficial.
Finally, financial education should go beyond your 401(k) plan. Consider providing information on Social Security, market volatility and budgeting—all of which can help your employees plan, save and invest for their futures. (You can find insights on those topics and more at J.P. Morgan’s Participant Resource Center.)
In the same survey, over half of respondents said they are willing to spend time planning for retirement—but they don’t know where to start.
Plan participants need direction beyond a set of documents. Three-fourths of survey respondents said they need help with contribution advice, and seven in 10 think it should come from their employer.
Think about that: 70% of employees are turning to their companies for guidance on how to invest in a retirement plan. That’s understandable, because for many people, participating in a 401(k) plan may be their first experience with investing or financial planning.
Investment decisions ultimately rest with each participant. Still, you can help support your employees’ long-term financial health by guiding them throughout the entire retirement planning process.
Take the Lead
Being proactive and adopting industry best practices can make your overall retirement plan more effective.
According to J.P. Morgan’s plan sponsor survey, plan sponsors with a proactive philosophy (versus a hands-off approach) believe their plans more effectively help participants achieve a financially secure retirement.
Proactive plan design features, such as automatic enrollment and automatic contribution escalation, have become increasingly popular among plan sponsors. And participants have an extremely favorable view of these features: 97% of those automatically enrolled in their plans and 99% of those whose contributions were automatically increased on an annual basis say they are satisfied.
Source: J.P. Morgan Plan Sponsor Research 2013, 2019.
We’re Here to Help
Upgrading your retirement plan can be a challenge —especially when you’re already devoting a tremendous amount of time and energy to run your company. JPMorgan Chase’s Commercial Banking experts are here to help you navigate that challenge so you can focus on your business.
Our Retirement Link website and J.P. Morgan’s 401(k) solutions team can help you build stronger plans for your employees. Contact a Commercial Banker today to be introduced to a retirement plan specialist.