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In today's competitive job market, attracting and retaining top talent requires more than a competitive salary. Employers must offer comprehensive benefits packages that provide long-term value to employees. One of the most effective ways to achieve this is through well-designed retirement plans.
A significant portion of American workers—59%—express concerns about running out of money in retirement1, making robust retirement benefits a critical factor in their decision-making process.
Retirement plans are integral to the employee lifecycle, encompassing Recruitment, Retention, Rewards, and Retirement. Offering these benefits can set employers apart from the competition and become a pivotal factor in a candidate's decision to accept an offer. Doing so also gives companies more choices in how to attract various employees. Plan design can help optimize the mix of employee demographics by appealing to different needs with the goal of making retirement a viable option as employees approach retirement age.
Simply put, a well-designed and communicated retirement plan enables strong business practices.
By The Numbers
71% of adults express moderate to significant worry about their financial future for retirement2
42% of workers cite retirement savings as one of their top concerns3
47% of employees cite retirement availability as an important reason to join4
84% of employees express interest in personalized 401(k) investment options tailored to their unique financial situation5
Retirement plans play a crucial role in attracting top talent, but in today’s labor market, simply offering a plan is not enough. Competition means employers must find ways to stand out with attractive retirement benefits and plan features. In addition, federal and state-level mandates increasingly call for employee access to retirement plans as critical for the American workforce.
Many prospective employees often evaluate job offers based on the quality of the retirement plans, from basic options to comprehensive, well-structured benefits that promote long-term security.
Employees consider factors like employer matching contributions, vesting schedules (the period of time required for employees to fully own the benefits that employers contribute to their retirement plans), and the availability of financial planning resources. Additionally, features like automatic enrollment and contribution increases show a commitment to helping employees build their retirement savings.
By offering robust retirement plans, employers can position themselves as forward-thinking and supportive, making their job offers more attractive. They can also work toward alleviating the worry that most Americans feel about their finances in retirement. This focus on competitive retirement benefits can be a crucial factor in recruiting talent effectively.
Plan sponsors have many options and significant flexibility in designing retirement plans with attractive attributes and additional services.
* Data sourced from “Today’s Employees Expect Retirement Plan Benefit in ‘New Savings Paradigm’,” PlanSponsor, February 1, 2023.
By incorporating these features, plan sponsors can create robust and attractive retirement plans that support employee financial security and enhance recruitment and retention. Plan sponsors should, therefore, strongly consider what plan providers and other services, such as recordkeepers, can offer to deliver these services effectively and at a manageable cost.
Having attractive options also requires effectively communicating the value of retirement plans as part of a prospective employee’s total value of compensation. Best practices include highlighting the retirement benefits in job postings, discussing them during the interview process, and incorporating them into onboarding materials.
Providing clear and accessible information ensures potential employees understand these benefits' long-term value. Successful communication can include storytelling and personalization. For example, some companies share testimonials from employees who have benefited from the retirement plan. Others create personalized benefit statements illustrating how the retirement plan can grow over time and support future financial security. Interactive tools and calculators can also engage employees and help them see the impact of their contributions.
Finally, transparency is essential. Detailed benefit statements that clearly outline the employer's contributions, plan fees, vesting schedules, and potential growth projections help employees understand the total value of their retirement plan and offer transparency. Regular updates and open communication about changes or enhancements to the plan further reinforce this transparency.
Benchmarking is a critical tool for designing retirement plans and identifying competitive advantages. By engaging a strategic advisor, strategic employers use comparative, publicly available data to compare their retirement offerings against industry standards and competitors. This advanced approach provides plans that are attractive and competitive in today's job market.
For instance, companies can monitor and analyze retirement benefits offered by similar companies that tend to attract the same talent. Benchmarking identifies gaps and opportunities, such as enhancing employer matching contributions and introducing auto-enrollment features. Offering these plan characteristics can make them an employer of choice in their industry.
Utilizing industry data is another sophisticated strategy. Employers can rely on plan advisors to help interpret this data and make informed decisions. Advisors can also provide insights into prevailing trends, such as the increasing popularity of financial wellness programs and HSAs. They can work with employers to factor in considerations for salaried vs. hourly workers, non-qualified plans and stock options for higher-level hires, and differences such as age bracketing of the employee population.
A seamless handoff from hire to onboarding is also crucial. It sets a positive tone for new employees' long-term relationships with their employers. Streamlining the onboarding process helps new hires feel welcomed and supported from day one.
Providing clear and concise information about retirement benefits during onboarding can prevent confusion and foster engagement. Simple roll-in services can also help employees consolidate their retirement assets from previous employers into their new plans, simplifying their financial management and increasing satisfaction.
Finally, continuous education and support are vital for helping new employees understand and maximize their retirement benefits. Regular updates, workshops, and access to financial advisors can empower employees to make informed decisions about their retirement planning, enhancing their overall experience and loyalty to the company. These efforts create continuity and ultimately support retention as well.
Offering robust retirement plans is a strategic advantage for employers aiming to attract and retain top talent. By incorporating employer matching, immediate vesting, auto-enrollment, financial wellness programs, and more, companies can create compelling and competitive retirement benefits.
Effective communication and seamless onboarding further enhance the value of these plans, ensuring employees feel supported and engaged from the start. Ultimately, robust retirement plans are not just a benefit but a crucial investment in the company's long-term success.
An experienced retirement plan advisor can help you design a plan to make the participant experience a recruiting advantage. Our comprehensive approach can also help you satisfy fiduciary duties and reduce your administrative burden.
1 Voice of the American Workplace, Franklin Templeton / Harris Poll, 2024.
2 Americans' Outlook for Their Retirement Has Worsened, Gallup, May 25, 2023.
3 Voice of the American Workplace, Franklin Templeton / Harris Poll, 2024.
4 Phased retirement: An effective tool in the employee attraction/retention game, WTW, January 23, 2023.
5 Voice of the American Workplace, Franklin Templeton / Harris Poll, 2024.
While every effort has been made to assure that we are correctly summarizing legal obligations, this work does not constitute legal advice, and should not be construed as us providing legal advice, and is absolutely no substitute for obtaining competent legal advice as to your particular obligations.
Wilmington Trust is not authorized to and does not provide legal, accounting or tax advice. Plan sponsors and recordkeepers should consult with their legal and tax counsel on compliance questions.
This article is intended to provide general information only and is not intended to provide specific investment, legal, tax, or accounting advice for any individual. Before acting on any information included in this article, you should consult with your professional adviser or attorney. Facts and views presented in this report have not been reviewed by, and may not reflect information known to, or the opinions of professionals in other business areas of Wilmington Trust or M&T Bank. M&T Bank and Wilmington Trust have established information barriers between their various business groups.
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