During the recession of recent years, employers ceased hiring and cut back on employee benefits packages with a broad sword. Due to the Affordable Care Act, however, health insurance will soon be required for some employers and mandatory for all individuals. As the economy continues to recover, employers today face a new challenge: to offer employee benefits outside of health insurance and make themselves more attractive to current employees and future candidates.
A 401(k) plan is one of the most popular and most valuable options for employers to offer. With various concerns about the future of Federal retirement benefits, 401(k) accounts have become the better bet in retirement planning. The value is so great, in fact, that some organizations have decided to offer part time workers access to 401(k) and other company savings plans, which until now, was unheard of. 401(k) contributions have the benefit of being tax-free when deposited and are instead taxed at the time of withdrawal.
The process of “matching funds," if offered in employee benefits plans, is a valuable 401(k) plan incentive. A Safe Harbor plan matches employee contributions at 3% or higher from the employer, up to a maximum amount decided upon in the plan. An employee not participating in this plan is in effect throwing away the employer’s contribution to their savings. The funds in a 401(k) can be rolled over to new employers' plans throughout a person’s working years if desired, or if the balance is high enough, can be left with former employers who have plans that yield higher growth in capital, providing flexibility to the dedicated saver.
Company savings plans, stock purchase options and 401(k) plans benefit employees of all ages. Young participants with decades before retirement will have a very full nest egg at retirement, plus the ability to access funds in an emergency, depending upon the plan’s rules and regulations. The senior worker who is looking to retire within a few years will also benefit, as retirement plans usually provide higher growth potential than general savings plans outside of employment. The middle years of a worker are often those wherein they contribute highly and into as many of these plans as they can possibly afford. Those who use their plans wisely will look forward to a very comfortable retirement, with some statistics even alluding to a future generation of retirement millionaires.
Another attractive offering found in employee benefits packages includes discounts on major purchases such as automobiles, appliances and furnishings through agreement contracts between employers and a discounting company. Some organizations provide discounts for luxury items such as vacation destinations and cruises. Employers today can also offer college or trade school tuition to employees who desire to advance within their employment. This usually is based on employee tenure. These educational employee benefits have obvious win-win results for both the employer and employee, as the employer benefits from on the job performance of employees that are intent on higher responsibilities.
Attractive benefits packages should be promoted liberally to the public to draw interest from high-quality candidates. In addition, the Employee Handbook should be updated to emphasize new benefits in order to get higher participation and have the biggest influence on retaining valuable staff. The business climate today is rebounding, albeit slowly. After the harsh recession, the savvy business owner or CEO will need to give their company a benefit facelift to make their company attractive to competent workers.
PAYDAY can help design an attractive employee benefits package and answer questions about best practices. For more information, please contact us today.
PAYDAY Workforce Solutions provides a single database SAAS solution for Human Capital Management (HCM) including payroll, human resources, time management, benefits administration and onboarding to companies of all sizes and in various industries.
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