Give Your Retirement Plan a Year-End Checkup
This time of year often brings reflection on what we value. For employers, a retirement plan may not immediately come to mind, but it provides employees with a structured way to save for the future.
Offering a plan is only the starting point. The end of the year can be an opportunity to look at how employees are using the benefit and identify practical adjustments for the year ahead.
Look Beyond Participation
Participation rates provide useful information, but they may not tell the entire story. An employee can participate and still be unsure how much to save, whether they are receiving the full match, or where to go for help.
Employers can look deeper into plan data by examining participation and contribution rates, use of the employer match, and trends among different employee groups. These patterns may highlight areas where employees could benefit from additional information or outreach.
Reviewing the data can also help employers focus their efforts rather than assuming the same approach will work for everyone.
Consider How Plan Design Can Help Support Saving
Plan features can help reduce some of the steps employees need to take to begin saving. Automatic enrollment, for example, generally enrolls eligible employees at a specified contribution rate while allowing them to opt out or choose a different rate.
Automatic contribution increases offer another option by gradually raising an employee’s contribution rate over time. Employers can review whether either feature fits based on their plan design, workforce and applicable requirements.
Make the Benefit Clear
Employees may see a retirement plan as another workplace benefit without fully recognizing what their employer provides. A company contribution is one of the most tangible examples, but its value can be easy to miss when employees do not understand how the match works or what they need to do to receive it.
Employers can make that information more useful by replacing plan terminology with clear, actionable explanations. If the company offers a match, for example, explain the formula, eligibility requirements, and any applicable vesting provisions in straightforward terms. Communications can also point employees to the investment options, planning tools and other resources available through the plan. The goal is to help employees understand what is available so they can make informed decisions about how to use the benefit.
Choose a Practical Priority for Next Year
Improving a retirement plan does not always require a major redesign. Year-end is a natural time to review plan data, employee feedback, and recurring questions, then identify one or two areas that deserve attention in the coming year.
The right priority will depend on what the review shows. It might mean reaching employees who are eligible but not participating, making the employer match easier to understand or considering whether an automatic feature fits the workforce.
Small, thoughtful changes can make a benefit employees already have easier to understand and use. As you look ahead to next year, start with one question: What could we do to help employees get more from the retirement plan we already provide?
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Patricia L. Hutchinson
Director of Retirement Plan Services
AIF®, MBA