For employees thinking of resigning, retirement plans can make or break the deal
But despite their retention challenges, employers are falling short about emphasizing their retirement offerings, TIAA’s survey finds.
Should I stay or should I go?
It depends – does my current employer have a decent retirement plan and does the HR department help me figure out what’s best for me?
That’s actually top of mind for a good many people these days in this era of the Great Resignation, according to TIAA’s 2022 Employee Retention survey.
TIAA surveyed more than 1,000 employees enrolled in their company’s 401(k) or 403(b) plan, and found that 30 percent are considering a job switch this year, but that the details of workplace retirement plans may make or break the deal. Indeed, a sizable majority (77 percent) of all of the respondents say retirement benefits are highly important when making the decision to switch jobs.
“When they take a job, they not only want a paycheck for now, but also a way to create a paycheck in retirement. Offering retirement benefits gives employers the ability to attract and retain more employees.”
Despite facing retention challenges, employers are falling short about emphasizing their retirement offerings, TIAA’s survey found. Specifically:
- Just 16 percent of employees say they received information about their current retirement plan before being hired.
- Less than half (42 percent) say their benefits were communicated when they first started their job.
- Just over half (54 percent) say they received information during open enrollment.
Communicating frequently about all benefits, especially retirement benefits, and providing employees with financial wellness resources can support recruitment and retention efforts and improve retirement outcomes, Bellucci says.
“There are so many missed opportunities to talk about retirement benefits with employees,” he says. “HR leaders can hold meetings throughout the year and not just during open enrollment time, or have a discussion with a concerned employee around the water cooler. So many employees are looking for help and they want to know more about their benefits.”
Indeed, nearly seven in 10 employees would like more information about their retirement plan or savings and think educational resources would be extremely or very helpful, according to the survey.
Employees want their employer to provide educational tools on retirement savings planning, as well as tools to better understand their plan’s investment options. Employees in their 30s particularly want more help, according to the survey.
Getting such tools from their employer is important, as seven in 10 employees say their employer is a trusted source on retirement-related information and advice and 65 percent say the same about financial wellness.
“More employers are now providing not just financial wellness programs, but also mental health and mental welfare support to their employees,” Bellucci says. “These employers feel a high sense of responsibility to employees and that attracts people to their companies because mental wellness and mental health care are really important to employees.”
TIAA also polled 500 benefit plan decisionmakers to augment employee responses. Additional survey findings from both sets of respondents include:
– Two in three employers say it has been harder to attract and retain employees in the last year. Nine in 10 expect this to continue over the next year. Employers who offer a 401(k) plan and those who rank their company’s benefits poorly are more likely to say attracting and retaining has been an issue.
– Seven in 10 employers use retirement benefit communications as a tool to retain employees. Eight in 10 say they use these benefits as a recruitment tool.
Compared to 2020, employers are more likely to emphasize attracting and retaining employees as a top reason their company offers a retirement plan.
– Fifty-four percent of employers say their company has a high level of responsibility for their employees’ retirement preparedness. Another 46 percent say the same for financial wellness.
– Employees who trust their employer in these areas are more likely to have a better understanding and higher satisfaction with their retirement plan. They also think their employer puts in effort around financial wellness, retirement preparedness and financial literacy; and as such, these employees place higher importance on benefits when making decisions to change employers.
– Employers who have a high level of responsibility are more likely to emphasize access to guaranteed lifetime income and be more likely to offer in-plan guaranteed lifetime income annuities. Such employers think their benefits provide an advantage in attracting and retaining employees, and they also believe their employees trust them and that their employees are satisfied with the benefits.