Could Your Employer-Sponsored Retirement Plan Be Your Best Recruitment Tool?
Last year, the national unemployment rate fell to 3.9 percent, according to the Bureau of Labor Statistics, the lowest we’ve seen since 1969. That’s great news for workers and the nation’s economy, but if you’re looking to hire, you may be finding it difficult to attract qualified candidates.
In this environment, potential job seekers can afford to be selective, so they’re holding out for the best salaries and perks they can find.
One way organizations can attract more skilled applicants is through their retirement offering. In a survey conducted by the TransAmerica Center for Retirement Studies, 81 percent of workers rated an employer’s retirement plan as a major consideration in their job search.[i]
Retirement Plans Are Key to Attracting Talent
Each year, the Employee Benefit Research Institute (EBRI) conducts a survey to gauge worker confidence about their retirement readiness. The 2018 results are particularly revealing as respondents who took part in a workplace defined contribution plan (DC), such as a 401K, were far more likely to feel confident about their retired future (76 percent) than those who did not (46 percent).[ii]
Since findings like these indicate a preference for employer-sponsored retirement saving options, offering a workplace defined contribution plan can be a real competitive advantage for companies when it comes to hiring qualified talent.
However, since 93 percent of businesses now provide a 401k,[iii] attracting the most qualified talent to your company has more to do with the quality of your offering than merely providing a DC plan.
When comparing employer-sponsored retirement programs, employees are looking at several key factors. First and foremost is whether the employer offers a matching contribution. Research shows that 75 percent to 77 percent of workers would opt for an increase in their employer match over a similar increase in pay.
According to a Vanguard study, the most common matching formula offers $0.50 on the dollar for the first 6 percent of pay. By meeting—or particularly exceeding—the average, employers can improve their odds of being considered a workplace of choice by prospective hires.
Of course, eligibility plays a role as well. As concerns over social security availability continue to escalate generation by generation, Americans are grasping the necessity of retirement saving. Even waiting a year to be eligible for a company program can negatively influence a prospective hire’s decision to join your ranks. Vanguard reports that two-thirds of employers allow employees to make immediate contributions.[iv]
Another area where companies can improve their workplace of choice quotient is through automatic enrollment. A high majority of workers (81 percent) prefer to have their employer automatically enroll them in a company-sponsored retirement plan at a median rate of 7 percent.[v]
By offering a competitive retirement plan, employers may be expressing empathy to prospective hires, but the message goes beyond that. Companies who offer instant eligibility, a competitive match, and auto enrollment are investing in the future of their employees to establish long-term relationships.
About the Author
Charles is Director of Retirement Plan Advisory Services for First National Bank Wealth Management. In this position he has the overall responsibility for the coordination and delivery of investment advice, fiduciary consultation and vendor searches for retirement plan sponsors and investment committees.