This Month’s Question:
Is Your Plan Actually Helping Employees?
Why It Matters
As we reach the midpoint of the year, it's a good opportunity to evaluate how employees are engaging with your retirement plan.
Retirement plans can be a valuable employee benefit, but simply offering a plan does not guarantee positive outcomes. Participation rates, contribution levels, and employee engagement can provide useful insight into how effectively a plan is serving its intended purpose.
Periodic review of these metrics may help identify opportunities to improve employee engagement and strengthen the overall retirement benefit offered by your organization.
Practical Ideas to Consider
✔ Review participation rates
Understanding how many eligible employees are contributing to the plan can help identify potential engagement opportunities.
✔ Evaluate deferral rates
Participation is important, but contribution levels matter as well. Consider whether employees are saving enough to take full advantage of employer matching contributions, if applicable.
✔ Explore automatic features
Features such as automatic enrollment and automatic escalation may help increase participation and savings rates. Plan sponsors should evaluate whether these features align with their plan objectives and workforce needs.
✔ Promote financial wellness resources
Educational programs, webinars, and retirement planning tools can help employees better understand their benefits and make informed decisions.
A Common Mistake We See
Many employers focus primarily on plan participation and overlook contribution rates. While participation is an important measure, employees who are contributing at very low levels may still face challenges in achieving their long-term retirement goals.
A Simple Takeaway
A successful retirement plan isn't measured solely by participation. It's measured by how effectively employees are engaging with and benefiting from the plan.
The Guardian 401(k) Advantage is a monthly newsletter that answers key questions and delivers practical ideas to help you make informed decisions, support your employees, and stay compliant.
