A well-structured, industry-competitive retirement plan is more than just an element of your benefits package. It can bring greater peace of mind and sustainability in a future where Social Security and pension plans probably won’t be enough. And it can mean financial confidence and stability for the people who keep your business running every day.
But when is the last time you took a hard look at your plan? Is it still optimized to meet your needs and your participants’ needs?
With 2018 in full swing, now is a good time to take a step back and identify potential gaps, opportunities and areas for improvement within your retirement plan. Your analysis should consider four key components:
1. Investment Lineup
Are your plan investments well-diversified? How are the funds performing and are they well-diversified? Take this opportunity to reflect back on your investment policy, evaluate your lineup and make sure it’s meeting the goals and objectives of your participants.
2. Employee Participation Rate
How many of your employees are actually participating in the retirement plan? Is the participation rate lower or higher than similar-sized plans within your industry? Depending on the results of this exercise, you may want to brainstorm strategies for boosting company-wide plan participation in 2018.
3. Employee Contribution Rate
How much are employees deferring into the retirement plan? If the company-wide contribution rate is low, it could mean that participants may not meet their retirement savings goals.
You should also drill down a bit deeper and compare contribution rates for highly compensated and non-highly compensated employees. This evaluation can help you prepare for non-discrimination testing by the IRS and ensure your plan is structured to allow all employees to contribute in a meaningful way.
As a fiduciary, it is your responsibility to ensure your plan fees are fair and reasonable, so this is one of the most important elements to analyze. Benchmark your retirement plan fees and expenses to see how they stack up to similar-sized plans within your industry, and to those charged by other providers.
The key ingredient to the long-term success and sustainability of your organization is also your most valuable business asset: your employees. The right retirement plan solution can enrich their lives, while also helping you boost retention and engagement.
Want a second opinion on your plan? Hewins Financial | Wipfli Hewins can provide you with a competitive, in-depth analysis of your current retirement plan for absolutely no cost. Contact our team for more information.