When we are reviewing a company’s retirement plan, especially in times like today, a common question that comes up is “What are other companies doing with their plan.” It’s instinctual to wonder what’s happening with other companies in your peer group and have an interest in how they address various aspects of their retirement plan. Something The Joseph Group enjoys is gathering reports/analytics from across the country and diving into what’s happening in the industry. This is especially helpful as we guide and prepare our clients for what the future holds. One study we review is Fidelity’s Plan Sponsor Attitudes annual report which was just released earlier this summer.
The report is based on a survey sample of various plans/sizes/industries and gives our team some insight into how the retirement plan landscape is evolving. This year, we found some key changes in the survey that are certainly noteworthy:
- Under the Plan Goals Category “Attracting and Retaining Top Employees” the survey reported a 9% increase versus previous years. This is a clear nod to the complexity and difficulty in hiring across all industries. Note: Consequently, whether the plan is helping attract the (above) employees saw a 10% increase on the “concerns” section of the report.
- When looking at the plan design changes made over the last 2 years 34% of plans increased their matching contribution amount. This seems to lend itself to the above notion that prospective employees are wanting more from their retirement plan and as a reaction, plan sponsors are re-evaluating their retirement benefit(s) package. Note: An additional 27% of companies surveyed noted they expect to increase their matching contribution in the next 12 months.
- In a testament to retirement readiness, plan sponsors are increasingly recognizing the drawbacks to employees working beyond retirement age. The top four drawbacks (all which reported at least a 9% increase in 2022) are: Increased benefits costs for company, challenges in strategic workforce planning, reduced mobility for younger workers, and lower overall productivity.
While there are certainly stories behind some of these answers beyond the numbers, it’s worth noting the above results are rather large changes versus previous years. What this tells us is that companies are making dramatic changes to their workforce/benefit plans, including how the retirement plan factors in. There are a few key action steps we can take away from this report.
- If you’re wondering how other companies are addressing their retirement plan, it appears that increasing employer contributions to the plan is a likely answer. Now is a great time to take a step back from your plan and review what options are available. Some plan designs can even help business owners truly maximize their retirement savings while still taking on the new environment for attracting and retaining top talent.
- Reviewing your plan annually, especially as the company grows or changes is critical to success of both the plan, but also the employer. It’s important to know your company’s plan trends and usage, as well as the annual results, so you can be proactive in making any necessary changes.
- Sending your employees off into the retirement sunset “on time” has benefits beyond the feel-good story. Getting employees prepared with savings and information can have a tangible impact on the bottom line. A robust education plan, availability of resources (such as an advisor) and providing ample benefits/opportunities to multiply savings is becoming a key factor in both operating an effective plan, and also operating an effective business.
Do you wonder exactly where your plan stands or how it stacks up against your industry? Give us a call. This is a critical function of operating a great plan and we want to help you and your team. Once you call and provide us with a few documents, we will put together a comprehensive review of your plan at no cost to you and guide you through a variety of options to enhance your plan for both you as plan sponsor and you as the participant.
Written by Matt Kruckenberg, Manager of Retirement Plan Services. Matt can be reached at 614-907-8639 or email@example.com