Millennials, when compared to the other working generations, have an overwhelming tendency to migrate from job to job as their growth and skills see fit. Between the migratory habits of modern workers and organizational reclusion from offering retirement funds and pensions, what are companies to do when it comes time for employee retirement? Well, it varies from organization to organization, and only you can make that decision. We’ve gathered some pros and cons for you so you can decide how to handle the choice.
Pros of Required Retirement Planning Advice
1. Makes the organization competitive – Among some of the most successful employers are the ones who offer access to a retirement plan. They are the organizations with the best employer brands. In fact, it is one of the most important benefits to American employees (75%). Willis Mushrush, Business Development Specialist at the University of Missouri Extension, said:
“To be competitive in today’s labor market, most companies find it necessary to offer a standard benefit package, including health, dental and life insurance, vacation and leave policies, investment and retirement plans.”
2. It’s profitable for you – Giving your team the opportunity to participate in a retirement planning program isn’t just good for them, it’s good for you too. You can receive some significant tax advantages for your business because Congress wants to encourage employer-provided retirement benefits.
3. Can improve employee motivation – Making retirement planning part of your benefits packages isn’t just for the security of your team. Situating the retirement plan as part of your total benefits package makes for more engaged workers.
Cons of Required Retirement Planning Advice
1. Setting up the plan can be time-consuming – Picking the right plan and implementing that plan can take more time than you had anticipated. It’s not an overnight success story, it takes time and energy to set up the right plan for your organization. Find a trusted partner to handle the admin work so you can relax.
2. Will require professional help – Setting up a retirement plan for your staff isn’t an easy task. Subsequently, you’ll most likely need an advisor. Ken Hervert, Senior Vice President of Retirement Products at Fidelity, gives small business owners an introductory lesson on setting up a plan for employees:
“Many small-business owners say they want to set up a 401(k) plan because that is the plan they are most familiar with. However, after reviewing their situation, small business owners often conclude that perhaps another plan type, such asa SEP IRA or a Self-Employed 401(k), may be more appropriate.”
On the plus side, many retirement planning services can reduce or eliminate the service costs associated with implementing a retirement plan for your employees.
3. Requires dedicated budget to financial education – Your team won’t know their options unless you talk to them about their financial planning options. Choosing the right retirement plan can be complicated for any employee. Because of this, you’ll need a dedicated budget for teaching your team about their financial futures.
Should you give your employees the opportunity to (at least) start their retirement plan with your organization? Your company has to weigh the pros and cons to determine not only the best plan, but if you should even provide one in the first plan. Do the potential tax credits outweigh the costs it will take to set up the retirement program? Only you can be the judge for your team.
Ready to take the plunge into being an employer of choice? Contact a member of our retirement planning experts to help you select the right plan for your timeline, budget and organization.
Bio: Tim Olson
Tim Olson, CEBS, CMFC and Managing Partner of the Olson Group, has been working with Nebraska employers for over 33 years and has been in the employee benefits industry since 1980. Presently, Tim works with employers assisting them with self-funded and fully insured medical and dental programs, consumer-driven health strategies, term life, long term disability insurance, section 125 flexible benefit programs, voluntary benefits, retirement programs, and executive compensation plans. Tim currently works with more than 200 employers participating in 500 employee benefit plans, and covering more than 30,000 employees throughout Nebraska, Iowa, Missouri, and Kansas. You can read more about Tim and his insight on employee benefits needs on The Olson Group Blog.
