It’s National 401(k) Day: How do your retirement benefits stack up?
“Shiny” new perks might cause employers to overlook what’s right in front of them and underestimate the importance of retirement benefits—a mistake that could end up costing them talent, says a new Guideline survey.
With National 401(k) Day today, it’s a good time for employers to re-evaluate how their retirement benefits stack up.
According to a Guideline survey, most employers underestimate the importance of retirement benefits—a mistake that could end up costing them talent. The survey found that for 93% of professionals, retirement benefits influence their decision to join a company. Contrast that with only 36% of employers who rank retirement in their top 3 most valued benefits by prospective employees: It’s a detrimental misalignment, according to Guideline.
Employees still greatly value traditional benefits, according to the survey:
- 1 in 2 employees would turn down a job offer from a company that did not offer a retirement benefit.
- 1/3 of employees would be willing to trade in a lower salary for equivalent value in a retirement benefit.
- 78% of employees would not suggest their employer as a good place to work without a retirement benefit.
Q: With National 401(k) Day on Friday, what should employers do to re-evaluate how their retirement benefits stack up?
A: It’s important that employers re-evaluate the retirement benefits they offer—not only to make sure that they’re aligned with the needs and preferences of their workforce, but for recruiting new candidates as well. At the very least, I would suggest employers review their fee schedule. I recommend a comprehensive approach that includes taking inventory of current benefits, assessing the cost and use rates of each benefit, and evaluating employee satisfaction would be a great start. It’s crucial to understand the workforce’s changing priorities and demographics amid the evolving financial landscape.
Q: Why do most employers underestimate the importance of retirement benefits?
A: It’s no surprise that businesses are searching for fresh strategies to keep their teams happy and productive—from generous PTO policies to budgets dedicated to employee learning and development. But the focus on “shiny” new perks might cause employers to overlook what’s right in front of them: a return to more traditional benefits. We see this disconnect in our own research: according to a recent survey, when we asked employees to rank the importance of different benefits, 81% of employees placed retirement in their top 5. However, only 62% of employers did the same.
Q: Do retirement benefits influence workers’ decision to join a company?
A: Absolutely. Our research shows that employees still greatly value traditional benefits, like 401(k)s. For instance, in a recent survey, one in two employees would turn down a job offer from a company that did not offer a retirement benefit. From an employer perspective, 70% of employers also agreed that offering a retirement benefit has positively impacted their ability to recruit and hire talent.
Related: Tomorrow is 401(k) Day! PSCA releases ready-to-go campaign for employers, plan sponsors
Q: Do employers rank retirement in their most valued benefits by prospective employees?
A: While employers agree that retirement benefits are important, our research indicates that some employers underestimate their importance. In our survey, only 36% of employers rank retirement in their top 3 most valued benefits by prospective employees. Contrast that with 93% of professionals surveyed, who say that a retirement benefit influences their decision about whether to join a company. There’s a clear misalignment in expectations that could end up costing employers new talent.
Q: Would employees be willing to trade in a lower salary for equivalent value in a retirement benefit?
A: Guideline’s research shows that 1/3 of employees would be willing to trade in a lower salary for equivalent value in a retirement benefit. So while 401(k) benefits may have once been considered a nice-to-have perk, we’re seeing that many employees do place greater importance on having compelling retirement benefits.