(Austin Business Journal) - It’s no secret that Austin is a thriving tech hub. The dynamic city regaled as the live music capital of the world is also becoming synonymous with tech giants and future-focused startups. With the influx of progressive opportunities comes a need for top-tier talent, making the task of hiring and retaining employees in such a competitive market an uphill battle.
The pandemic has shifted the mindset of today’s workforce. Company culture, nap pods and an office ping pong table no longer stand out as attractive perks that signify an employer of choice for young professionals in tech.
Like the industry itself, these modern candidates are looking downfield. Even competitive salaries, once a primary driver of employment, are now sharing the spotlight. According to investment firm Voya Financial, 64% of Americans said retirement benefits were just as important as a competitive salary, while 60% said they are more inclined to stay at a job if it offered an employee-sponsored retirement plan.
If you’re a retirement plan sponsor, you already know that simply offering employees a retirement plan isn’t enough to prevail as an employer of choice, especially if you adopt a “set-it-and-forget-it” approach. Companies must ensure their plan is well-designed, well managed, and effective.
How effective retirement plan design can impact participant outcomes
Optimizing your company’s retirement plan design can have a significant impact on your employees’ participant outcomes. For example, if you want to encourage greater adoption by eliminating barriers to plan enrollment and participation, making enrollment automatic and setting appropriate deferral rates are a great place to start.
A thoughtfully designed retirement plan is one that is tailored to a company. Not only should it resonate with the specific dynamics of the organization, but it should feel personal to its employees. Plan sponsors should account for how much the plan works toward an employee’s retirement readiness in addition to how much it helps them save for the future. Employees should feel that their company has a vested interest in their future financial success.
Setting your tech employees up for retirement success
When we talk about participant outcomes, we are talking about how financially empowered employees feel, how prepared they are for specific challenges in retirement, and — ultimately — whether they save enough to meet or exceed their retirement needs.
To help facilitate retirement success, your employees will need education and guidance to prepare themselves for their ideal financial future.
Companies can achieve this by ensuring their retirement plan design includes educational opportunities and resources. For example, customized workshops that address various stages of retirement planning, financial wellness programs and even one-on-one meetings with advisors can make employees aware of key financial literacy issues.
Retirement plan sponsors who incorporate education into their plan design can help employees make informed decisions about their current and future financial pictures. When participants have a positive experience with their company’s retirement plan, they may be more likely to continue participating, recommend the plan to others, and be fulfilled in their employment.
Managing fiduciary responsibility
Being responsible for a company’s retirement plan can be a complex endeavor with legal ramifications if not managed correctly. It’s easy to say, “Offer a retirement plan and focus on participant outcomes,” but it’s not as simple to execute.
As a plan sponsor, you have a fiduciary duty to always act in the best interest of your employees when it comes to selecting retirement plan service providers and monitoring the fee arrangements and performance of those providers. If your organization does not have the right oversight in place, you could be held legally liable for any shortcomings on the part of your provider.
Fortunately, plan sponsors do not have to uphold their fiduciary responsibilities alone. Many businesses partner with retirement plan advisors to mitigate the risk of monitoring their retirement plan’s investment offerings, but it should be expressly written that this advisor will be performing the functions that recognize it as the true fiduciary. Engaging a trustworthy partner to take appropriate measures on your behalf shifts the burden of compliance off your plate.
SWBC’s Retirement Plan Services acts as a fiduciary as defined by the Employee Retirement Income Security Act (ERISA) and accepts complete responsibility for its investment recommendations. We manage our risk and protect clients by following a strict process of structure, discipline, and documentation. Because fiduciary responsibility is not simply about being right; it’s about having a prudent process in place, following that process closely and documenting every step.
To learn more about how your company can prudently manage your retirement plan, download our latest eBook: SWBC’s Practical Guide to Prudent Retirement Fiduciary Practices.
Richard Allison brings more than 30 years of experience and knowledge to SWBC Investment Advisory Services. His team provides retirement plan solutions using a thorough process of investment research and providing another layer of consulting expertise to our clients.
By Richard Allison – CEO, SWBC Retirement Plan Services
