- Auto-enroll employees and default high. Traditionally, initial auto-enrollment rates have started at 3%. But instead, Patterson said, “start your employees at 6% and auto-escalate it every year until they hit 10%.”
- Stretch the match. “One of the biggest mistakes we make with a match is we do it to benefit employees, but employees think that’s how much they should save,” he said. Instead, employers should consider stretching their matching contributions over a broader employee deferral.
- Make sure automatic enrollment is for all employees, not just new hires. “A lot of employers do automatic enrollment for new employees,” he said. “[By doing so] you are assuming your best, most committed employees know what they are doing with retirement. But there is no direct correlation between valuable employees and retirement. Sweep your employees once a year into automatic enrollment. If they want to opt out, they can opt out.”
- Embrace technology, including virtual financial coaches. “One of the top reasons people don’t use financial advisers is because they are ashamed — they have no financial savings, they are awash in debt,” Patterson said. “But tools like interactive virtual coaches can have astounding results. If you are looking for tools out there to help your employees, there are plenty.”
Is it time to make retirement savings mandatory?
Published
5 Min Read
Kathryn Mayer
Former Editor-in-Chief
Kathryn Mayer is a former editor-in-chief of Employee Benefit News.
