Are you considering adding a group retirement plan to your benefits package? Or perhaps you have one, but employees aren’t opting in? In this blog post, we’ll explore the benefits for both employees and employers. Next, we’ll go over key components of reviewing your plan.
Keep in mind that there are different types of retirement solutions that you can offer to employees. These include Pension Plans (defined benefit or defined contribution pension plans), Group Registered Retirement Savings Plans (GRRSPs), Deferred Profit-Sharing Plans, and more.
Why You Should Offer a Group Retirement Solution (GRS) in Your Employee Benefits Plan
Benefits of a group retirement plan for employees and employers
Having a good retirement plan as part of your employee benefits is crucial to retaining talent within your company. In fact, “60 percent of employees would be unlikely to work for a company that doesn’t offer a retirement plan.”
Here are five great reasons why you should invest in your employees’ retirement.
1.Payroll deductions
Employees who opt-in to a group registered retirement plan will have payroll deductions taken off each paycheck which will go directly into a retirement savings account. When employees contribute to their retirement account automatically, they won’t need to worry about how much or when to invest each payday. Plus, with contribution matching options, employees can double the amount they invest each month.
2.Dollar-cost averaging
There are many advantages of retirement savings accounts versus other investment options. Reduced market risk, which refers to the mitigation of potential financial losses due to market fluctuations, is perhaps the biggest. This is achieved through dollar-cost averaging – an effective way to build a portfolio since it involves continuous investments over time. It allows investors to adjust their contributions according to available funds and can be customized around any budget. Employees enjoy increased mental ease because they can save incrementally, and consistently build long-term wealth.
3.Tax savings
There are several tax advantages to a group retirement plan. Any employer contributions are a tax-deductible expense, similar to payroll. Employee contributions come from pre-tax dollars, which maximizes the savings, and reduces the income tax taken from each paycheque. That means neither party is paying taxes on what they add to the employee’s retirement account.
4.Employer matching contributions
Employer matching is a major benefit of certain types of retirement plans. The employer will match whatever amount employees choose to put into their retirement saving account – usually expressed as a percentage of monthly earnings. Many group retirement solutions are set-up so employees have to opt in. Employees can choose to participate or not, and how much to contribute each paycheque. If they do opt-in, they will receive extra savings above and beyond their regular pay, rather than just the amount they can save themselves. It’s basically like getting a raise, except the extra amount is deposited in a retirement savings account. Many employers have a maximum percentage they will match up to, but employees can choose to contribute above that percentage.
5.Support and education
Providing a retirement benefit of some type for your employees shows that you are willing to invest in them and their futures. The added monetary support can also help alleviate financial anxiety. It also gives you the opportunity to offer educational programs to help them understand their personal finances and the plan better.
6 Employer Considerations for an Aging Workforce, Retirement, & Employee Benefits
Group Retirement Plan Review
To ensure your plan is aligned with your corporate objectives and goals, here are a few tips to guide you when creating your group retirement plan.
- Plan design review – Before creating your plan, or when reviewing, ensure it aligns with your company’s values. Clearly outline your company’s objectives and goals to ensure your plan will match them. Make sure you understand the specific needs for the retirement plan and identify which features would make the plan more attractive and effective for your employees.
- Governance – Whether through an advisor, or your tax authority, it’s always best to familiarize yourself with any legislative rules or regulations to ensure the plan you offer follows government standards. Your plan advisor will continually monitor changes and updates in regulations to make sure your plan remains compliant and adheres to any new regulations.
- Carrier partnerships – Throughout selecting the right solution for your employees, spend time choosing compatible carriers. Research their values, reputation, and performance and make sure they align with your corporate values.
- Communication – Ensure effective communication with your employees throughout this process. Clearly explaining the benefits, they will receive not only helps them understand the plan but also fosters engagement. Encourage employees to provide feedback during the planning stages. This feedback is invaluable for making any necessary adjustments before the rollout of the new group retirement benefit. By maintaining open lines of communication, you create a more informed and engaged workforce. Plus, chances are better that you will have a higher number of employees who opt-in.
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Conclusion
A comprehensive review of the needs of your employees can give you insights into the type of retirement support they might need. Recognizing the benefits for both employees and employers is the first step. Next, considering essential factors when approaching your retirement plan will set you up for success.
Learn why a group retirement solution is essential for your employee benefits plan
Why You Should Offer a Group Retirement Solution (GRS) in Your Employee Benefits Plan
