Even as most people hope to kick their feet up and retire as they age, nearly one-third of Canadians have saved nothing at all for retirement. While this is a dire prospect, it’s often because their employers don’t offer a good retirement plan with flexible options. In order to offer the best retirement plan, so that employees don’t feel like their money is trapped in a vault, you need to do some thinking.
Having a retirement is slated to be a privilege of the wealthy in coming generations. As millennials are having fewer kids and buying fewer houses, they’re also saving less for retirement. It’s fundamentally due to a lack of resources combined with the student loan crisis.
Be a trendsetter and offer a good retirement plan for your employees. Here are 5 things to think about when you’re looking to help your employees.
1. A Good Plan Attracts Talent
One of the best ways to attract a strong pool of talent to your organization is to have a great benefits package. Strong candidates are going to weigh all of the things that you offer as an employer when deciding who they want to work for. A great salary can make a huge difference but the ability to retire comfortably can seal the deal, all things being equal.
As employees get older, they start thinking about the future. While you can get the cheapest and most minimal plan that can attract young talent to your startup regardless of what you offer, it won’t keep them around. As your employees’ age, their priorities will change.
If they’re paying into a retirement account that won’t give them what they need later on in life, and they might pursue another position.
2. You Can Actually Cut Costs
Offering a great retirement package is just as good if not better than offering the highest salary. While some employers might feel that salary is most important to their workers, it turns out they’re wrong. Lower wage workers are the most likely to struggle to put money away for the future.
Offering some contribution throughout the year gives you the opportunity to add value to their employment, and in a way that could be tax deductible.
While some employers worry that they might not be able to afford or to pay for regular contributions, if you want to get a leg up, this really is an inexpensive way. Offering employees health insurance and retirement benefits at a group discount could be cheaper than having to hire and train new employees constantly.
Increasing the benefits at your workplace will attract a strong talent pool who are savvy enough to see the value of a good benefits package.
3. Government-funded plans and CPP Are Compromised
By the time that millennials are ready to retire, the Canadian Pension Plan might not be around for everyone. At best, it’ll be operating at 3/4 capacity, with retirees forced to fund the remainder of their retirement. The majority of retiring millennials will be forced to have some alternate funding in place well before then if they intend to retire.
With CPP in dire straits, government-funded plans coming from automatic payroll deposits are a solution many provinces have discussed. While this is a great idea to ensure that everyone has something to retire with, it’s not yet in place, it’s run by the government, and the work to start it could take decades.
With employers skeptical of the government’s administrative capabilities of setting something like this up, they are seeing retirement plans more useful. Having secondary options to supplement the standard retirement options helps people feel secure of their retirement.
Employers who facilitate contributions take a serious position on the financial futures of their employees — and in turn generate more employee loyalty.
4. Employers Must Learn The System
Thankfully, many employers see offering retirement plans as simply “the right thing to do” and are making sure their employees feel comfortable. Saving for a secure retirement won’t look the same for everyone, however.
As an employer, you need to gain a full understanding of how your plan works. If you’re running a small business, there are incentives designed to help with payments and contributions.
Some employers offer a matching program to add an extra incentive for contributing to retirement. Look for tax credits to come down the pipeline in coming years. Soon enough, you’ll be rewarded fairly for doing the right thing.
It’s each employee’s fundamental responsibility to save for retirement. Having an employer who understands this is not only refreshing but helpful when making difficult decisions.
5. Ensure Your Plan Has Features They Want
When you’re deciding on a plan to use for your business, it needs to have features that your employees want. It needs to be able to be transferred to spouses and children easily in the unfortunate case that an employee dies. Retirement plans should vanish into thin air.
Retirement plans should also offer the flexibility of contribution on behalf of your employees. While some employees will want to give over 20% of their checks, others won’t want to contribute 2%. Find a retirement service plant that allows your employees the flexibility they want.
Remember that employer funding will boost employee participation. The higher you go with matching funds, the higher employees will go with their contributions. Many will max out at the point when matching stops, so work it out with your accountant to ensure you can get the best benefit to your business… and your employees.
The Best Retirement Plan Needs To Build Wealth
When you’re choosing the best retirement plan for your employees, be clear that it builds wealth for everyone.
Having a retirement plan is nice but as costs are sure to rise, it has to rise in value as well. It should accrue value over time to ensure that it keeps pace with inflation and builds wealth over time.
If you’re also thinking about how to ensure your employees, check out our guide to group plans.