can be an effective strategy, depending on what you’re trying to accomplish
with your organization’s retirement plan.
certain amount of ongoing communication is mandated, such as fee disclosure and
other notices, depending upon your plan’s design. The minimal approach would be
to send out what you are obligated to, in a format that meets the basic
regulatory requirements, and to call it a day. The benefits of this approach
the least expensive approach;
requires the least amount of thought or work; and
will receive the least scrutiny from your plan participants.
you have something to hide, this is a good strategy. For example, if your plan
expenses are high or if you offer a safe harbor match you don’t want employees
to take advantage of, burying the information in a wad of legal jargon might be
the best way to go. You might not want to encourage employees to join the plan,
because new participants start with such low balances that they don’t generate
enough revenue sharing to offset the recordkeeping costs.
is, however, another school of thought, one that believes operating a great
retirement plan is both the right thing to do, and that it makes good economic
sense. Arguments in favor of this approach include:
suggest employees engaged with their employer’s retirement plan are less likely
to quit. Reducing turnover expense is
obviously a good thing.
studies suggest employees who feel they are on track to a financially secure
future are less distracted in the workplace and consequently are more
point to the high costs associated with older workers remaining in the
workplace; higher compensation and health care costs, and fewer opportunities
to bring in new replacement talent. Many older workers would opt to retire
earlier if they had the account balances necessary to support this.
retirement plan can be a powerful recruitment tool. You can make the case to a
prospective hire that helping employees achieve financial independence is part
of your organizational culture.