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Retirement is not as clear cut as it used to be — adults are living longer, healthcare costs are soaring, and the future of Social Security is murky. More than ever before, your employees are looking to you to help them prepare for the future. By offering solutions that allow your employees to plan for retirement, you can earn their loyalty and help them achieve their goals.
Starting a Retirement Plan to Strengthen Your Business
As a small business owner, the decision to offer a retirement plan can be an important one to consider. A strong retirement plan can be a key factor in attracting and retaining employees. In fact, a 2013/2014 Global Benefit Attitudes Survey by Towers Watson showed that nearly two-thirds of U.S. workers indicated their workplace retirement plan was an important reason they stayed with their current employer.
But retention may often be about more than happy employees; it can potentially directly affect your business’s bottom line. According to Forbes Magazine, between interviewing, evaluating and training new employees, the cost of replacing an entry-level employee alone can range from 30 percent to 50 percent of that employee’s salary; for a mid-level employee, it could cost up to 150 percent of annual salaries to replace them.
That’s time and money you could be investing in starting a retirement plan. And, with a potential for tax-deductible employer contributions — it may cost less than you think. Here are some considerations to get you started:
Help Is Available — Every Step of the Way
When starting a retirement plan, there are some basic plan aspects you’ll want to learn about, including investment selection, fiduciary responsibilities and plan administration. The good news is you’re not alone.
An experienced and diligent Financial Professional who specializes in retirement plans can assist you throughout the entire process — from service provider evaluation and plan setup to ongoing investment monitoring and participant education.
In addition, you may also choose to work with an experienced, independent third party administrator (TPA) who can help you oversee the administrative functions of your plan to help keep your plan compliant with applicable regulations. These retirement plan professionals can help manage many administrative duties from plan testing to annual plan filings, potentially saving you time to focus on your business.
Of course, you should also consult with experienced legal counsel, as appropriate, in connection with the establishment and administration of your retirement plan.
Strength in Numbers
Not all retirement plan providers are created equally, but the following are some indicators, among many others, that you and your Financial Professional can use to help you evaluate the quality of a plan service provider:
Experience – How many years has the provider been in the retirement plans industry and how many clients does the provider serve?Financial Strength – Does the service provider have the financial strength to be there for the long term?Investment diversity – Does the provider offer a broad range of investment options from highly-rated fund companies to help meet diverse participant needs?Awards/Recognition – Has the provider been recognized by independent and well-regarded industry associations for its customer service, investments and educational resources?Administrative Ease
As a plan fiduciary, you’ll want access to important plan details.
In addition to excellent service support, a strong provider will offer access to a variety of plan reports detailing, among other items:
You want a provider with that not only educates employees, but helps engage them to take action. A provider should have a general understanding of your participants’ diverse needs and be able to help you target the right messages to the right audience to help your participants meet their individual retirement goals.
As a business owner, you will likely want access to resources to help measure the success of your plan. What income replacement goals should your participants be aiming for? Does the provider have tools to show you if employees are on the right path for retirement? Can the provider formulate an action plan — with targeted messages — to help improve savings behaviors?
The first step in adding a retirement plan to your business is to understand what to look for in a provider. To start, you can contact a Financial Professional with retirement plans expertise to learn more. A well designed retirement plan may not only help your employees save more effectively for retirement, but may potentially be one of the most valuable employee retention tools your business offers. And that may not just be good for your employees, it may also be good for business.
This material is provided for informational purposes only, and is not intended to serve as tax, legal or investment advice. You should consult with your own experienced legal counsel and other Financial Professionals prior to making any determinations regarding a retirement plan.