When asked why they did not participate in their employer’s 401(k) plan, 40 percent of respondents to a survey said they did not have time to enroll. Nearly an equal percent said they did not earn enough, and 19 percent cited the hassle of enrollment as the reason for non-participation. These concerns, as well as other factors, could be affecting the participation and retirement readiness of the employees of your organization. Here are a few ways you can address these common concerns and increase plan participation rates.
Avoid Information Overload
It is the plan sponsor’s fiduciary duty to educate its plan participants about their options. Information should be delivered in modest-sized, more frequent communications in order to avoid information overload. Offering exhaustive seminars or extensive literature on your employees may overwhelm them, and in turn, may decrease plan participation rates. Instead of providing all the information upfront, only deliver the relevant materials as an employee moves through the enrollment process.
Customize the Information You Share
A well-designed and implemented employee education program is key to engaging employees. The program could involve various methods of communication. You could create an app or a section of your website to make information available whenever an employee needs it. Videos and interactive tools make the information more understandable. Give them an option to communicate with an HR representative to ask questions and receive information tailored to their needs, and consider offering group and one-on-one sessions.
Take Advantage of Automation
Automating certain aspects of plan management and enrollment will help save time and make the process seem less cumbersome for plan participants. For instance, you can automate enrollment for new hires and implement auto-escalation for contributions once an employee has been with the company for a certain time period or receives a pay raise. Additionally, you could consider waiving the waiting period for eligibility for employer contributions that the plan offers as an incentive to have your employees defer immediately.
Demonstrate the Plan’s Appeal
Employees will be more likely to enroll and contribute to a retirement plan if they observe clear benefits. These steps will help you demonstrate the plan’s appeal to your employees:
- Offer matching contributions and explain how this feature works. This is one of the most efficient ways of making a retirement plan more appealing.
- Participants contribute before and after taxes via Roth contributions. Let participants adjust their level of contribution as needed.
- Discuss tax advantages in the educational material you share. For instance, contributions to a plan are made before taxes, which means the taxable income of participants will be lowered.
- Ask employees for feedback regarding their enrollment experience and find out what kind of services or educational materials they would like to see.
Take the Next Step
If you are ready to consider ways to enhance participation in the retirement plan you offer to employees, PlanPILOT can help by offering consulting services, as well as improving cybersecurity for the personal data you collect and store, and assisting you in choosing investments. Getting help with these aspects of retirement plan oversight will improve on communication, education, and delivering a more personalized experience for plan participants.
Call us today at (312) 973-4911 or email firstname.lastname@example.org.