Top 10 Features Employees Want in Their Workplace Retirement Plans

As an employer, offering a workplace retirement plan to your employees is a valuable benefit that can help them secure their financial future. However, to attract and retain top talent, it’s essential to provide a plan that meets their needs and expectations. At nVest Advisors, helping small businesses build and manage great – and affordable – employee benefits is a big part of our mission.

Here’s what our experience, backed by research, can tell you about what your employees want in their company retirement plan:

1. Robust Investment Options

Employees want a diverse range of investment options to suit their risk tolerance and financial goals. This includes:

• Index funds: These funds track a specific market index, offering low-cost diversification.
• Target-date funds: Automatically adjust the asset allocation over time based on the employee’s retirement date.
• International funds: Provide exposure to global markets, potentially reducing risk.
• Alternative investments: Options like real estate or commodities can offer diversification.

In the 401(k) plans we’ve been asked to review and re-vamp, we’ve noticed a trend toward fewer and fewer investment options for participants over the last few years, and we think that’s a step in the wrong direction. What employees are asking for, is the ability to either use a pre-made solution, or build their own strategy. A robust workplace retirement plan can empower employees to make these choices. The plans we build and manage offer that. We even survey your team once per year to ask them what kinds of investing options they want!

Reference: Investopedia: https://www.investopedia.com/terms/i/indexfund.asp

2. Automatic Enrollment and Escalation

A significant feature that employees appreciate is automatic enrollment, where they are automatically enrolled in the plan unless they opt out. Additionally, automatic escalation, where contributions gradually increase over time, can help employees save more consistently.

Reference: Fidelity Investments: https://sponsor.fidelity.com/bin-public/06_PSW_Website/documents/Automatic_Enrollment_FAQ.pdf

3. Employer Matching Contributions

Employer matching contributions are a powerful incentive for employees to participate in the plan. Matching contributions can be a fixed percentage of the employee’s contribution or a dollar-for-dollar match up to a certain limit.

Reference: The Motley Fool: https://www.fool.com/retirement/2024/07/19/heres-what-the-average-401k-match-is-worth/

4. Low Fees

High fees can erode the value of retirement savings over time. Employees prefer plans with low expense ratios, especially on index funds. Consider negotiating with plan providers to obtain favorable fee structures.

Not only are high fees unpopular (for obvious reasons), they can set your company up for regulatory problems or even lawsuits.

Reference: Vanguard: https://investor.vanguard.com/investment-products/mutual-funds/low-cost

5. Financial Education Resources 

Providing employees with access to financial education resources can help them make informed decisions about their retirement savings. This can include workshops, webinars, or online tools.

Reference: AARP: https://www.aarp.org/money/

6. Roth IRA Option

A Roth IRA allows employees to contribute after-tax money and potentially withdraw funds tax-free in retirement. This option can be attractive to employees who believe their tax rate will be higher in retirement.

Reference: IRS: https://www.irs.gov/retirement-plans/roth-iras

7. Spouse or Domestic Partner Benefits

Offering benefits to spouses or domestic partners can be a valuable perk for employees in committed relationships. This includes allowing them to participate in the plan and potentially receive survivor benefits.

Reference: Human Rights Campaign: https://www.hrc.org/resources/corporate-equality-index

8. Flexible Retirement Options

Employees may have different retirement goals and lifestyles. Consider offering flexible retirement options, such as phased retirement or part-time work after retirement.

Reference: Society for Human Resource Management (SHRM): https://www.shrm.org/topics-tools/news/hr-magazine/ways-to-phase-retirement

9. Disability and Death Benefits

Providing disability and death benefits can offer employees peace of mind and financial security in case of unforeseen circumstances.

Reference: MetLife: https://www.metlife.com/insurance/disability-insurance/short-term/

10. Access to Financial Advisors

This one often catches employers off-guard, but employees want access to a financial advisor as part of their 401k investing strategy. Offering employees access to financial advisors can provide them with personalized guidance and support in planning for retirement. This can be through a group financial planning arrangement or individual counseling. At nVest Advisors, building a relationship with your employees is one of the top priorities of our advisory team. They’ll have access to basic and comprehensive financial planning with a real advisor, debt management and optimization tools, a local phone number to speak with a human advisor, and much more.

Give your employees a workplace retirement plan that works for them

Your 401(k) plan should be more than a simple investment account. It can be an immersive experience to help your employees build real wealth and security.

Whether you are a company of one, or have hundreds of loyal team members, your benefits plan needs to meet the needs of the participants, and the budget of the company. A comprehensive workplace retirement plan can be a key component of this strategy.

At nVest Advisors, our job as a fiduciary employer plan advisor is to provide you with both.

If your company doesn’t have a plan, let us show you the options available – some require no cost or effort on your part, at all!

If your current plan needs an overhaul, or you haven’t shopped it in the past few years, it’s time for a plan review and a competitive bid.

As a champion for small businesses and their employees, we’d love to be able to show you how working with a family-owned, independent, fully fiduciary financial advisor can dramatically improve your employees’ experience with a 401k, and provide you the peace of mind and protection from liability that a properly created and managed plan can be.

The first step is a simple and no-cost Plan Q&A Meeting with our team. Let’s examine your needs and see if we’d be a good fit for your company and your team. Book your consultation today!