Addressing Common Concerns about Offering a Retirement Plan at Your Business
Business owners may be hesitant to offer an employer-sponsored retirement plan to their staff for a variety of reasons. Some may not see the benefit at all, while others may think that they can't handle the associated costs or administrative burdens. While these are common concerns, you may be surprised to learn that retirement plans don't have to be expensive or complicated to manage, and they can help in your efforts to have a high-quality workforce. Consider the following when determining whether your business could benefit from offering a workplace retirement plan.
Consider it an investment in your efforts to stay competitive. More than 40 percent of small business owners recently surveyed by Paychex said they don't offer a retirement plan because they didn't see the benefit; but in reality, it’s an integral part of staying competitive in today’s tight labor market. You can't expect talented employees to join your business and stick around without offering salaries that are competitive within your industry. The same holds true for a benefits package that includes a retirement savings plan.
Weigh the costs of a retirement plan with hiring expenses. More than half of the respondents in the Paychex survey said they don't offer employees a retirement plan as part of their employee benefits; 60 percent cited plan costs as the reason. But as mentioned above, many employees are looking for companies that offer a retirement plan. If you don’t offer this as part of your benefits package, this could lead a quality employee to leave. That’s why the costs of establishing and managing a retirement plan could be minor compared to the costs associated with replacing employees. For instance, when an employee leaves, there can be costs that come in the form of negatively impacted budgets, productivity, and employee morale — as well as the cost of replacing the employee. This would generally include the cost of recruitment, training, salary and benefits, and workplace integration.
Weigh retirement plan costs with hiring expenses. Many employees look for companies that offer a retirement plan, so if you don't offer this benefit, a quality staff member could leave.
Outsource perceived administrative burdens. Nearly 10 percent of the respondents to the Paychex survey said they didn't offer a retirement plan to employees because they thought it would be too difficult to establish and administer. Part of the complex administration includes providing accurate employee census data. Every time a company sends a 401(k) contribution for processing, it must also submit electronic data to support recordkeeping. In general, retirement plan providers require complete census data on all employees to track eligibility and plan entry dates. Such functions, however, can be integrated with payroll administration. Doing so can help you reduce administrative time and costs, improve reporting, and meet fiduciary obligations.
Work with experts who can provide participant support. Retirement plans can help employees reach their future financial goals, but your staff may not know how to participate in it or need help along the way. Rely on the support of a plan partner who makes it easy for employees to enroll in the retirement plan, provides resources that can educate your team, and helps them make the most of this important benefit.