What lagging 401(k) participation means for employers
Among benefit options, saving via 401(k) plan certainly has upsides. Problem is, according to a new survey on the issue, smaller employers are having a rough time effectively communicating those upsides to their workforces.
The result? Participation is not what it should be and that’s a definite competitive disadvantage, especially with record-low unemployment rates, according to a report from Nationwide.
Also, when the Bureau of Labor Statistics reports that 71% of all U.S. workers have access to retirement benefits (defined-benefit and defined-contribution plans), it’s a clear reason why offering a 401(k) to employees is necessary to competitively attract and retain talent in today’s strong, steady labor market.
Eric Stevenson, president of Nationwide Retirement Plans, says the company’s latest research, which surveyed 400 U.S. business owners with workforces of 11-500 employees that offer 401(k)s, found business owners strongly agree that 401(k)s offer key benefits, including:
- including attracting and recruiting top talent (88%);
- tax advantages for both one’s business and employees (88%); and
- improved employee retention (86%); and
- being viewed by employees as necessary (84%).
The survey data also found that, although nearly nine in 10 business owners report their retirement-plan provider offers tools and resources to help encourage employees to participate, 53% still struggle with communicating the benefits and encouraging participation among employees. Plus, 68% of business owners acknowledge it’s their responsibility to encourage employees to participate in a 401(k) offering.
“The data illustrates that the industry has an opportunity to help business owners bridge this gap, and make a meaningful difference in the retirement security of their employees,” Stevenson says.