It’s hard to imagine a time before 401(k) plans, but employee fiduciary risk management once relied heavily on employer-backed pensions. Over the past four decades, 401(k)s have grown in popularity as businesses realized the benefits that come with them.
While 401(k)s have seen incredible growth since their inauguration, their 40th anniversary is a great time to review the program, its process, and how it could improve. Here are a few things businesses can consider implementing regarding their own 401(k) offerings.
Once new employees are hired, it becomes difficult to add them to a 401(k). Paperwork is already a standard part of their first day, so why not include paperwork for 401(k) enrollment? By incorporating 401(k) signups from the getgo and making opting in the default, businesses can increase participation and ensure as many employees as possible are enjoying retirement planning perks.
Unfortunately, one major deterrent to 401(k) participation is the long vesting periods that are often part of these programs. Workers tend to switch jobs more often than in past generations, so standard requirements that an employee stay in a job for at least five years may feel outdated. Businesses should consider allowing new employees to sign up for a 401(k) plan immediately or within six months to increase participation as well as boost their own benefits packages.
The details of 401(k) plans can be overwhelming, especially to those who aren’t familiar with the ins and outs of investing. Helping employees through the process benefits you by encouraging more signups and showcasing yourself as an employer who cares. From the start, workers should feel as though they can ask any questions and receive thorough answers.
Retirement education can become an important perk of employment. Bring in seasoned guest speakers to discuss the hows and whys of employment savings. During these sessions, make sure everyone is allowed to ask any questions they have, and afterwards, ask employees how they feel about the effectiveness of these sessions.
Good fiduciary risk management means giving employees the tools they need to prepare for the future. This means not only offering a 401(k) program, but providing education and helping employees sign up and adjust their contributions so they can get the most from their savings.