More employers are enhancing their retirement plan to compete for new employees — and keep the ones they have.
Increasingly, plan sponsors are refreshing their workplace retirement plans to give employees both the opportunity to save more for retirement and the flexibility to use both their personal and employer contributions in innovative ways to manage their financial needs. This trend comes as employers increasingly look to boost their employees’ retirement security and financial well-being, according to findings in the 2022 Next Evolution of DC Plans Survey from Willis Towers Watson.
The survey results show that more than one in four respondents (28%) expect to make changes to their plans’ automatic deferral features, whereas four in 10 plan sponsors (38%) expect to adopt an innovative contribution strategy. These strategies include allowing participants to use their contributions to reduce student loan debt or directing contributions to an emergency savings fund or a health savings account.
Using the Retirement Plan as a Key Attraction and Retention Tool
More than half of the survey respondents (55%) expect to have attraction and retention issues over the next two years, with one-third (36%) of those considering their retirement plan as an important tool to attract and retain employees. Significant gaps in priorities are expected over the next two years between sponsors that connect their plan with attraction and retention and those who do not. Those that do are focusing on using their defined contribution (DC) plan to enhance employee engagement for retention, raise the importance of attracting new talent and align diversity, equity and inclusion goals.
According to the survey, 75% of employers plan to enhance their defined contribution retirement plan offerings to better support the financial needs of their current employees and remain competitive to potential recruits. Eighty-two percent of employers plan to focus on changing and enhancing the employee experience when engaging with their retirement plans. Almost all employers plan to offer personalized one-on-one support, and 91% plan to boost their digital tools to help employees with budgeting and spending.
The 2022 Next Evolution of DC Plans Survey was conducted during January and February 2022. A total of 363 U.S. employers that sponsor a DC plan participated in the survey. Respondents employ 8.4 million employees and represent a broad range of industries.
The “Great Job Switch?”
According to the Bureau of Labor statistics, while 4.4 million workers decided to leave their jobs in February 2022, about 6.7 million people were hired during that same time. Many industry analysts believe it’s more appropriate to call this trend “The Great Job Switch” instead of “The Great Resignation.”
For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.
Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com
©2022 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.