When your most recent hires became eligible for your company’s retirement benefits, most said they didn’t plan to participate. Out of several who were on the fence, only one actually enrolled in the 401(k) plan. In addition, several employees who were participating in the plan have stopped their contributions in recent months.
Those are warning signs that your company’s retirement plan isn’t working — and that it’s time to reach out to employee benefits specialists for help with getting back on track.
Is Your Retirement Plan Driving Employees Away?
Here’s how a construction firm realized its retirement plan was in trouble, and decided to bring in 401(k) specialists.
The company had previously offered a 401(k) plan for employees, but found that construction workers typically did not participate — they preferred to have the money now, instead of set aside from their paychecks. As an alternative, the firm set up a “discretionary profit-sharing plan.” This type of plan, common in the construction industry, allowed the company to put funds away for employees without requiring workers to contribute.
As the construction firm’s employee base grew older, several workers began leaving for jobs at other companies. In their exit interviews, many mentioned that they liked the firm, but it didn’t offer a 401(k) plan and they felt they needed to start saving more for retirement.
In fact, these employees were in the firm’s profit-sharing plan, but didn’t realize what it was or how it would benefit them. Those who had heard about it said they thought it was a plan for the company’s owners and assumed they wouldn’t benefit — which was inaccurate. As a result of not educating employees about its retirement benefits, the construction firm was losing key people to competitors.
Getting Help From Retirement Benefits Specialists
Once the construction firm realized that its retirement plan was in trouble, it started to take action. The firm worked with a financial advisor to change its plan from discretionary profit-sharing to a 401(k) profit-sharing plan, and made a concerted effort to educate all employees about the benefits of participating. The firm focused especially on key employees in their 50s who might be worried about having enough money saved to retire at age 65.
As a result of going through this process with retirement benefits specialists, the construction firm improved employee retention and built trust within the company.
While decreased participation in your company’s retirement benefits plan is the most serious sign that you should bring in an expert, there are other warning signs to watch out for. These include:
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Rising plan costs
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Employees complaining to HR about fund performance
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Complaints about limited investment options
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Poor asset allocation, such as investing in a single fund only in cash and equivalent funds
If you’re thinking of bringing in a specialist to help put your 401(k) back on track, here are some common strategies used to resolve any issues with the plan. First, a financial advisor or retirement plan specialist needs to conduct a thorough evaluation of your plan, and work with your company to collect feedback from new hires, current employees and those who are approaching retirement age.
Based on the information collected, the specialist would then recommend changes to meet the goals of the plan and help to implement these improvements. From there, the financial advisor or specialist would schedule regular reviews at least once a year, and preferably on a quarterly or semi-annual basis.
Need expert advice about your current 401(k) plan? Request a free, 30-minute consultation with Richard Brothers and start maximizing your plan’s value.
