AutoNation said this week it is using savings from the new tax law toward retirement and cancer benefits for its employees.
The automotive retailer doubled its matching contributions to employees’ 401(k) and increased its deferred compensation match to 100% of the first $5,500. Those benefits went into effect Jan. 1.
The company also is introducing a cancer benefit for its workers and their families. AutoNation says it will pay fully for MetLife cancer insurance for employees, spouses and children up to age 26. The benefit, which also includes a cash payment up to $5,000 for cancer diagnosis, with no limitations on how the money is spent, will apply to AutoNation employees starting on their first day of employment. That benefit begins Feb. 1.
AutoNation’s cancer benefit is unique because only a small number of employer-sponsored cancer and critical illness insurance plans are fully paid by the employer. In 2017, MetLife had more than 1,500 employer-sponsored cancer and critical illness plans and less than 5% were employer paid, the carrier said.
AutoNation has 26,000 full and part-time employees.
The retailer said the new benefits are a result of the $70 million to $100 million annual benefit it expects from the tax reform law, which was signed into law in late December and slashed the corporate tax rate from 35% to 21%.
“We are excited about the pro-growth environment for business in the U.S., which includes the recently signed tax reform bill,” says AutoNation CEO and President Mike Jackson. “As a U.S.-based company, our employees, customers and shareholders will benefit greatly from a reduction in our corporate tax rates.”
The retailer is the latest in a string of companies, including Visa, Aflac and SunTrust, to make increases to their 401(k) plan matching contribution in wake of tax reform bill. Other companies have beefed up benefits, provided one-time bonuses to employees and increased wages.
Enhancements to employee benefits can be even more advantageous to workers than a monetary reward, says Julie Stich, associate vice president of content at the International Foundation of Employee Benefit Plans.
“While a one-time bonus can certainly be exciting and beneficial to an employee, employee benefit enhancements such as increasing the 401(k) match can be much more valuable in the long-run because deferrals to a retirement plan can increase dramatically over the years through the power of compounding investment earnings — helping the employee to earn much more than a one-time bonus might be.”
Meanwhile, boosting benefits is seen as a way for employers to recruit and retain employees. Nearly one-third of employers expanded their benefit packages in the last 12 months in an effort to attract and retain top talent, according to the Society of Human Resource Management's 2017 Employee Benefits Survey.
“If an employer offers an employee benefit that a job candidate or employee values, such as paid parental leave or higher retirement plan matches or enhanced health benefits, it can be a deciding factor for which job they want to take or whether they bypass a call from a recruiter,” Stich says. “It’s all about tapping into what employees really value.”
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