In the face of the Great Resignation, offering employees better retirement benefits may help boost recruitment—and retention.
Manufacturers have experienced some of the biggest workforce challenges of the Great Resignation. According to the Bureau of Labor Statistics, compared to pre-pandemic levels, the manufacturing industry has experienced the biggest surge in workers quitting—an increase of nearly 60% in late 2021.
How can your business improve recruitment and retention in a highly competitive market? How can you encourage current team members to stay when their skills are in demand?
The benefits—specifically the retirement plan—you offer may give you an edge to attract and retain a reliable workforce. This is vital when workers evaluate many factors to find their best opportunity. Enhancing your employee retirement plan is a great place to start and can demonstrate your commitment to your employees’ long-term well-being.
Ask yourself the following questions to determine how to help your employees maximize their retirement savings to better attract and retain the best talent.
How can retirement benefits help you recruit?
In the manufacturing industry, we often see far lower employee participation and engagement in retirement plans. This is often due to a lack of support and education in most retirement plans.
In many cases, employees mistakenly believe their income level isn’t high enough to make a meaningful investment. This isn’t the case—if they start now, even a 1% investment can make a difference for the one in four Americans with no retirement savings. Especially if you, as an employer, offer a competitive match plan and ongoing support.
Tools such as online advice, auto increases, and retirement calculators can make it easy for your team to get a head-start on saving, but never underestimate the power of a personal touch. Take the time to hold education and enrollment meetings with employees to offer support and understand their plans. Resources and recommendations should be easily accessible—whether your employees prefer to engage online or in person.
In many cases, improving education and awareness—and evaluating your match contribution—is the best way to refresh your retirement offerings. Giving employees more resources to understand their investments can set you apart as an employer committed to their long-term financial success.
How can you encourage employee engagement?
Helping current employees understand the advantages of your retirement plan can help them see greater value in the benefit. Start with the fundamentals, educating your employees on why leveraging these benefits is in their best interest:
Social security isn’t a complete safety net – While Social Security can provide some income in retirement, it likely isn’t enough. According to the Social Security Administration, Social Security will only help cover approximately 40 percent of the average person’s retirement expenses. Contributing to a retirement plan is a necessity to reach retirement goals.Saving a little today can mean a lot for tomorrow – Because of compound returns, money invested earlier earns more than money invested later. Starting late makes it more challenging to catch up and save enough in time for retirement.Providing advice can help them save – One of the primary reasons employees don’t start saving is that they don’t understand how or—where —to invest. The number of options can feel overwhelming. You can help ease these concerns by providing your employees with access to financial and investment advice.
Remember, many employees in this industry don’t use their retirement savings benefits. Covering the basics can encourage them to get started.
Do your participants view your plan as a benefit?
If you offer retirement benefits, it may be worth revisiting whether your plan is genuinely beneficial to current and prospective employees. Participation and deferral rates are two quick ways to gauge the health and perception of your plan. If either rate is lower than expected, evaluate the following areas and how you can add value to your employees’ retirement goals:
Employee resources – Remember, quality education is key to helping employees understand the value of their plan, and how contributions today will make a difference years down the road. Does your plan make it easy for employees to enroll and understand their investment options? Are there opportunities to consult with professionals for personalized investment advice? Do employees have access to tools like retirement readiness calculators?Investments – Your plan should help employees reach their retirement goals by offering high-quality, diversified investment options. That comes with a lot of responsibility. It’s worth asking: Are you comfortable reviewing your plan’s investment decisions as a plan fiduciary? If you cannot keep pace with the responsibilities of managing investment options, consider enlisting the help of a third-party fiduciary service provider to manage your investment lineup. A third-party investment manager can reduce your burden and help ensure your participants have high-quality investment options they need to save for retirement.Company Match – Simply put, the amount you contribute is one of the keys to improving participation and deferral rates. Your employees want to feel like you’re just as invested in their future as they are. If you add or increase a company match, you could improve more than just employee participation. You may find that it helps attract and retain employees. Ultimately, the benefits of increasing your company’s match may outweigh the costs.
Asking yourself these questions—and discussing them with your retirement plan consultant—can help you identify ways to ensure your plan is meeting your needs and protecting your business. Offering a high-quality retirement plan can be a competitive advantage, increase employee satisfaction, and make your business a more desirable place to work. All must-haves in today’s workforce.
About the Author:
Eric O’Donnell is a director of retirement product development with Sentry Insurance. Sentry provides property, casualty, life insurance, and retirement products to manufacturers and other businesses. Learn more at sentry.com.