If your workforce includes employees who aren’t taking full advantage of your retirement plan, you may want to look for ways to increase plan participation.
At GuideStone®, we believe that employers can help increase employee participation by making a few specific changes to their retirement plan design. Below, we’ve answered some common questions regarding implementing strong plan design features and how these changes pay off in the long run.
What plan design changes can an employer make to help increase employee participation?
Implementing programs such as matching, automatic enrollment and automatic contribution escalation can help increase employee participation.
How do matching contributions increase participation?
When an employer matches all or a percentage of an employee’s contribution amount, employees are more motivated to contribute because the employer’s contribution is viewed as potentially “free money” for the employee. Though such a program would create a direct expense for the employer, it can be an effective way to increase participation.
How does automatic enrollment work?
With automatic enrollment, employees are enrolled in the plan at a preset contribution rate. Employees can elect not to contribute or to contribute a different percentage of their pay. Since many employees choose not to opt out of automatic enrollment, it tends to increase participation rates.
Can you explain automatic contribution escalation?
Generally, the default deferral rate for retirement plans is too low for many employees to accumulate enough money to meet their retirement income needs. With automatic contribution escalation, an employee’s deferral rate is gradually increased over time, according to a specified schedule. An employee may opt out of the increases.
If you’d like to learn more, check out our Automatic Enrollment Guide.
GuideStone is pleased to provide different educational resources and tools to increase employee participation. We believe that with increased education and engagement comes higher participation. The more familiar employees are with their plan design, the more likely they are to utilize the plan to the fullest of its capabilities.
Below, we’ve answered some frequently asked questions regarding employee education.
How will providing financial education to employees increase participation?
A knowledgeable employee is more likely to understand the value of participating in his or her retirement plan. Materials should clearly communicate both the importance of saving for retirement and the benefits of participating in a retirement plan. Several different types of educational materials can be used. Employers also may want to consider providing one-on-one meetings to help reinforce the importance of saving for retirement.
What types of educational materials do plan sponsors use?
Plan sponsors use a variety of educational materials from the employee onboarding experience as well as ongoing education about how to maximize retirement plan benefits.
Don’t know where to start? GuideStone can help!
|Types of educational materials employers use||GuideStone provides?|
|Fund performance sheets||Yes|
|Individually targeted communication||Yes|
How can GuideStone assist an employer with efforts to increase participation?
GuideStone has a suite of tools available for participants and employers on its website. These resources include pre-recorded webcasts, calculators and an array of printed materials to help participants better understand their 403(b) plan and other investments through GuideStone.
Plus, GuideStone offers communication guidance on how to tailor your retirement plan education efforts to specific groups.
If you have any further questions, please call 1-888-98-GUIDE (1-888-984-8433) between 7 a.m. and 6 p.m. CT Monday–Friday or email Info@GuideStone.org.