As an employer, your company retirement plan is important both for employees and for the employer. While the financial benefits of company plans go directly to the employees, their employer will also benefit in less tangible — but often equally important — ways.
This means that every employer should periodically assess whether their retirement plan continues to meet its needs. Here are five signs that yours may no longer do so.
1. It Has High Fees
Fees and plan expenses can be a big drain on your plan’s effectiveness. While the employer pays the majority of most fees, others are passed on to participants in other forms. Therefore, this issue affects everyone. If fees have risen over the years, assess whether they are necessary or if you can get a better deal through a new plan.
2. Employees Aren't Excited
How enticing is your retirement plan for employees? Do new employees express interest and make a point of joining the plan? Do existing employee participate in a meaningful way? Do they attend informational meetings, ask questions, or meet with advisors on their own? Does the plan meet the needs of key personnel such as executives?
Talk to employees and human resources personnel to gauge interest in what you offer. The more you can provide what really excites employees and helps retain good ones, the more your retirement plan dollars help the company.
3. You Can't Afford to Match
Employer matching — where the company contributes an amount equal to a certain percentage of what the employee saves — is an important benefit for most American workers. In the absence of traditional fixed benefit or pension plans, these often offer the biggest financial boost by the company.
Can your company afford to offer a match? If not, your plan is less appealing to new employees and less effective for everyone. If you can't offer a match, consider changes in the plan that may allow one. A revised plan with lower fees, for instance, may free up money to put toward matching.
4. You Don't Work With Fiduciaries
Many people or companies can provide services involving your company retirement plan, but not all of them have your interests at heart. Does yours?
The best option is a fiduciary. Fiduciary relationships require individuals or services giving financial advice to work in the client's best interests. This is opposite those who must only prove that their services are suitable — but not necessarily your best option. If you aren't sure if your advisors' counsel is fully trustworthy, it's probably time to find new ones.
5. The Plan Is Too Limited
Limiting the offerings in any retirement plan is part of a good strategy to keep down costs and help employees participate. But if these are too limited, employees will be turned away or may not get the returns they need to retire.
For instance, if the plan offers several funds that appear diversified, a deeper dive might reveal that they all invest in the same primary stocks or bonds. Savvy employees will notice if they do their own research, while less savvy employees may notice that they can't get better returns by attempting different diversification methods. In both cases, though, you'll likely end up paying for a plan fewer people actually use.
Where to Learn More
Does your retirement plan fall into any of these potentially problematic categories? Are you unsure if it has problems or not? If so, now is a good time to consider changes or updates to make it work better for everyone.
A good place to start is to make an appointment with the retirement plan professionals at Presidio Wealth Management. We can help assess your current plans and find new ways to modernize or improve it. The result will be a retirement benefit that pleases both your accountant and your employees. Call today to make an appointment.