Companies and institutions that sponsor retirement savings plans work hard to develop attractive options that will encourage participants to save and invest for retirement. However, in spite of considerable efforts (and resources spent) to educate plan participants on the fund choices, the value of the benefit and company matches, employees are not taking full advantage of their plan and many are not feeling secure their retirement savings are adequate.
A retirement savings plan, such as a 401(k) or 403(b), is a valuable employee retention and recruitment benefit. But sponsoring one takes a great deal of work and employees do not always fully understand the plan’s value or utilize its benefits. Meanwhile, you need to make sure the investment options are sound, diverse, and low cost while meeting participant needs. That means developing an investment policy statement and monitoring process that:
- provides ongoing vigilance,
- regularly reviews participant and fund behavior, and
- considers new investment options.
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.