How To Get Employees To Save For Their Own Retirement
Ever heard of the saying, “You can lead a horse to water, but you can’t make them drink”? That’s what comes to mind when Employers go to the trouble and expense to put a 401(k) Plan in place for their employees and then get little
or very low participation in the plan.
Employers will then typically put a matching contribution in place to further try and incent employees to save for their futures. A matching contribution will be deposited into the employee’s account that contributes to their own account first.
This strategy to get employees to think about their future has been successful, but we still have a long way to go to get all employees heading to a secure financial future.
Another strategy employers can use to encourage their employees to save for their future is instituting an Automatic Enrollment feature into the plan. How does this encourage employees to participate in their retirement plans, you ask? It works on an
“opt-out” instead of an “opt-in” behavior. A study by Money.com has shown employees with an auto-enrollment feature in their plan are 32% more likely to participate in their retirement plan than employees that didn’t
have an auto-enrollment. If an employee has to go fill a form out to join a plan, and they think that is too much trouble or they just forget about getting it done, the same will hold true for “opting out” of a plan. Before you know it,
your employees are on their way to helping themselves save for retirement.
Increasing employee participation continues to be the primary focus area for employers, with 64% (an increase from 60% in 2015) indicating this was the most important measure of an effective plan.”
If you haven’t considered changing your plan to include an auto-enrollment feature, feel free to speak with one of our Retirement Plan Advisors to increase the success of your company’s plan. Please contact us at 866-238-0082.
Director, Retirement Plan Services
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