As we look ahead to another wild year winding down, HR professionals might be thinking about company retirement plans. Now is a good time to reassess a business-directed retirement plan — in light of a rapidly changing economy — to make sure the plans you’re offering employees are relevant and helpful.

Successful retirement planning isn’t built in a day. It's the work of a team and is always better when reassessed in accordance with the world around you. Remember, you are planning for a group of people who have been thoroughly knocked around over the past two years.

People are worried about inflation and whether they and their families are going to be OK, and that worry is compounded as people get close to retirement age. Sharing content and education around how retirement planning works will give employees a sense of control and ownership.

What types of retirement plans will be beneficial in 2023?

With our economic environment shifting all the time, the types of retirement plans that make sense for your team will continue to evolve.

What are the main types of plans to consider?

The 401(k) will continue to be the primary retirement plan option for companies, and these should be continually improved to keep up with market standards.

The state-run IRA is an account for employees to deduct money directly from their paycheck to a retirement savings plan. In recent years, many states have joined the roster of places offering state retirement plans for private-sector employees. Although employers typically are not required to contribute, many states require businesses of a certain size to participate by allowing employee contributions, so if your company does not have a retirement plan, you should review your state's requirements and penalties for non-compliance.

Cash balance plans will also continue to grow rapidly for certain businesses that are stable and have high cash flow. They typically make sense for family businesses or businesses that are owned by partners, such as a law firm or a medical practice. Cash balance plans can be a great way for some businesses to save money on taxes and set aside cash.

How should HR professionals pick the right plans for their workforce in 2023?

Once you review what’s actually happening within your company and the different plans available to you, you can start updating your 401(k) and other plan options.

1. Automate your payroll.
Investing in automation technology is important for keeping records accurate and processing any changes to your workforce retirement planning. Most 401(k) mistakes are a result of improperly adjusting or processing payroll.

Moreover, payroll integration makes many action items in the 401(k) easier for your team. Ideally, you would set up what's called a 360 integration with your payroll provider. This automates changes to payroll and the 401(k) record keeper so there's less work for your team and less possibility of error.

2. Clarify and benchmark fees.
The costs of a 401(k) are always less well-known than the payouts. But in order to know whether your 401(k) is working for your team, HR professionals need a clear idea of how much they are paying their 401(k) service providers.

Get the basics clarified. What are you paying a record keeper, an advisor, or an administrator? Are you getting good value compared to the market for those dollars? See whether you can get a breakdown of benchmarks from similar businesses so you can get a relative sense of whether you're getting a good deal.

3. Get your advisor to help tell the story of your retirement plan.
Employers and employees might have a great working relationship, but sometimes employees need to hear financial news from a less familiar source. "We have a great 401(k)!" might be true, but it might be taken with a grain of salt by some employees when it comes from the boss’s mouth.

Having a third party, such as your record keeper or advisor, talk to employees about retirement income planning can be more helpful. For example, an advisor could mention during an education session that your fees are very low relative to the market. This kind of third-party confirmation will add value and confidence that employers might not be able to provide.

4. Find a level of understanding with employees.
Successful retirement planning isn’t always about the best match or the highest figure. Employers often get frustrated when they don't feel like employees appreciate the size of their 401(k) match or how the employer pays the fees for the plan. But appreciation comes from being understood.

Is a large match necessarily what your employees want? Would most of them simply rather receive a larger salary or be provided more bonuses? Part of designing a great 401(k) is stepping out of your own shoes and asking what your employees want.

Bear in mind that while employees might not be saying it out loud, they likely do appreciate the steps you're taking to reward them for their work. The truth is that workforce retirement planning is often a thankless job, but people need and appreciate it more than they will express in the moment.