There are many reasons for companies to offer a robust employee retirement savings program—it’s good for recruitment, for retention and for the future well-being of employees.
But what a firm provides, how it's structured and how the options are communicated to workers depends on the company's business strategies.
Firms with high turnover and lower-paying positions, for instance, might not be as aggressive as companies in more competitive industries or ones that are looking to retire employees at eligibility to make room for a new generation, according to Alison Borland, vice president of retirement strategy and product development at Aon Hewitt.
For companies that are looking to ensure their employees are prepared for retirement, it requires more than handing over a brochure explaining 401(k) plans and paperwork for their signature.
There are two things HR directors can do to give their employees their best shot at retirement readiness—offer a 401(k) plan with auto-enrollment and auto-escalation features, and develop a comprehensive, hire-to-retire program for financial literacy.
Both are sorely needed, according to a 2012 Deloitte survey of 430 plan sponsors, 84 percent said that only some or a very few employees would be financially prepared to retire.
Given what workers are up against—personal debt, rising healthcare costs, lack of personal savings—it’s not surprising. Most retirement programs aren’t making enough of a dent, but experts point to certain changes that can make a big difference.
Go on auto, but raise the default rate
Auto-enrollment is a great start to getting employees into savings mode, and 56 percent of 401k plans now feature it, according to the Deloitte study. And on one level, they’ve been highly successful.