Most employers today are expected to provide a retirement savings plan for their employees. For many years, this expectation involved little more than offering up the plan itself. However, today’s employees appear to want a little more — and there could be real advantages to employers that provide it.
What employees want
Some employees want, and more than likely need, education. They’re interested in knowing more about how their retirement plans work, what more they can do to save for retirement and how to better manage their finances overall.
Evidence of this can be found in the 2023 Retirement Trends Report published by cloud-based recordkeeping platform Vestwell. The report’s data is based on a survey of almost 1,300 individuals regarding their “saving behaviors, long-term goals, and the value of different saving-related benefits.”
For employers, the most eye-popping statistic generated by the report may be that almost nine in 10 employees want their employers involved in their retirement education. What’s more, the survey found that employers named “employee financial literacy” and “employee investment recommendations” as the top issues they wished their financial advisors would help them address.
So, on both sides of the coin, there seems to be a desire to build employees’ knowledge bases about retirement planning. And let’s face it, employers are in a unique position to do this as you presumably have the ear of your workforce and know how to communicate with them.
Content and strategy
So, what can you do to educate employees about retirement planning? A good place to start is to teach them about the general concepts of investing. Many employees are unfamiliar or at least not entirely comfortable with how investing works. You might teach them about things such as compounding growth, the tax implications of different types of savings plans, and how much they’ll likely need to save to reach a certain sum at retirement.
Naturally, you should also explain in plain language how your retirement plan functions. For instance, do participants need to enroll in the plan, or are they automatically enrolled? Once enrolled, how do they decide how much to contribute and how to allocate their money among different investments?
As you put together a retirement planning education strategy, be prepared to provide information in various formats. Email blasts or other online communication methods will resonate with some employees, while others will prefer printed material. By offering a mix of options, you’ll increase the odds of reaching different segments of your workforce.
Strongly consider in-person or virtual learning sessions, too. Even if your business offers printed and electronic materials, also offering seminars or “lunch and learns” can go a long way toward helping employees understand both your plan and the key concepts of saving for retirement. These sessions also provide an opportunity to reinforce the value of your retirement plan as part of each employee’s overall compensation package.
Last, be sure to offer educational opportunities regularly. Obviously, open enrollment is a major event, but be sure to touch base on retirement planning throughout the year. This is also a great way to remind employees of your plan’s value.
Everyone can win
Employees aren’t the only ones who stand to benefit from retirement savings education. Your organization may enjoy a boost in plan participation, which could in turn reduce fees. Plus, strong retirement savings may help with employee retention. Contact us for help assessing the costs of not only your retirement plan, but also of an initiative to educate your staff about saving for retirement.
If you have any questions about the content of this publication, or if you would like more information about HoganTaylor's Employee Benefit Plans practice, please contact Gwen Mazzola, Employee Benefit Plans Practice Lead.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.