It’s no secret that the future of Social Security is bleak. Current predictions indicate that the Social Security trust fund could run out by the year 2037. Unfortunately, the hard reality is that Social Security funds will not be there when today’s young workforce retires. With this government funding crisis looming over the heads of Gen X, Gen Y and millennial workers, an alternative solution is the only clear path forward for those early in their career.
In today’s world, benefits are key to retaining and hiring key employees. According to a 2011 Towers Watson survey, it was found that 47% of employees said retirement benefits was an “important” reason to stay with their current employer. In that same survey, 35% of employees stated that retirement benefits were a reason they decided to work for their current employer in the first place. With statistics like these, small business owners must ask themselves “What benefits am I offering that help retain my top employees?”
What Can Small Business Owners Offer to Retain Key Employees?
A major benefit for employees is a 401(k) plan. By offering a 401(k) plan, employees become vested in your business and will often be more likely to stay in their jobs as they watch their retirement funds grow. According to survey conducted by Harvard Business Review Analytic Services, nearly 80% of human resources executives said the key to keeping employees engaged and motivated is showing them that the company cares about their well-being.
We saw a recent example of this at a state-of-the-art testing lab, in one of the largest cities in Texas, that was having a hard time retaining their top talent. After providing top-tier employee benefits, including a 401(k) plan, the company’s highly-skilled professionals were retained. In fact as a result, our client’s average employee tenure has increased by 30% in the past two years. This is just one example of how offering a full suite of employee benefits helps businesses attract the brightest and hold on to the best.
What Should I Offer My Employees?
Standalone 401(k) Plan vs. Multiple Employer Plan
For small business owners, trying to procure a standalone 401(k) plan means paying set-up fees and administrative costs, as well as assigning someone within the company to handle plan compliance and administration. Additionally, what many small business owners are not aware of is the fiduciary liability that comes with administering a standalone plan. Between procurement, costly setup fees, and administering the plan itself, it’s no wonder that employers are often hesitant to move forward with retirement benefits for their employees.
However, there is another 401(k) plan option that offers many benefits for employers. The Multiple Employer Plan (MEP) through a PEO offers a low-cost, compliant plan, in addition to shouldering the fiduciary liability so the business owner doesn’t have to.
“Multiple Employer Plans help small business owners afford retirement plan benefits for their employees that are typically only cost-effective for large companies. Our 401(k) business was architected to meet the unique needs of the PEO industry. At Slavic401k, we make sure that our retirement plans fit the needs of our clients and will customize plans when the need arises,” says David Slavic, Investment Advisor Representative at Slavic401k
Securing retirement benefits for your employees is no small feat. However, by leveraging a Multiple Employer Plan’s economies of scale, the barriers to entry are significantly lower. Furthermore, plan administration on your part as a business owner is virtually nonexistent.
Here at UniqueHR, we’d love to help you find out more about how your small business can provide an affordable retirement plan to your employees. Contact us today to get started.
Download our newest eGuide, The Best Kept Secret for Small Business Success, for information on outsourcing burdensome administrative tasks.