3 Tips to Increase Retirement Benefit Participation

IRS contribution limits for 401(k) plans continue to rise with an increase to $23,000 for 2024.

“Limit increase news gives employers a great opportunity to educate employees about the importance of saving for retirement,” says Retirement Plans Manager Michelle Abergas. With contribution limits increasing each year, it’s fair to say that only the most highly compensated employees or dedicated savers will reach the maximum.

“But, that doesn’t change the fact that the sooner you get money in, the more it has time to increase,” says Abergas. “That is important for everyone.”

Taking the time to ensure that your employees save for retirement is an investment in your future workforce. However, if those benefits remain underutilized, they don’t do anyone much good.

Here are ways you can increase participation in your employer-sponsored retirement plan:

Emphasize financial wellness

While health and fitness often dominate the spotlight in discussions of workplace wellness, financial wellness is an important factor in overall employee well-being. In a recent Pricewaterhouse Cooper survey, 49% of employees surveyed said that money worries had a severe or major impact on their mental health in the last year. This can directly affect their engagement in the workplace, productivity levels, and even retention. In fact, employees who are stressed about their finances are twice as likely to look for employment elsewhere. For these reasons, it’s important that employers look for ways to cultivate workplace environments that can provide tools and resources to support employees as they deal with financial issues.

Respect generational differences

As Gen Z is beginning to enter the workforce, employers will need to become more diverse and flexible in the types of retirement plans and tools that are available to a wide range of workers. Already, Millennial and Gen Z investors are driving change in the retirement savings landscape with their preference for digital financial tools and their willingness to receive financial services from tech companies, rather than traditional financial companies. Likewise, employers need to also meet the needs and desires of an aging workforce. The number of workers ages 75 and older is set to increase by almost 97% by 2030. Employers will need to develop new ways to compel multiple generations – with often very different views on financial tools and readiness – to save for the future. 

[Read also: Tips for Leading a Multigenerational Workforce]

Use the power of the employer match

While employers have been adding new ways to increase job satisfaction amongst workers, employer matching of 401(k) plans is still one of the most desirable benefits that a company can offer. Employer matching is a powerful incentive to encourage retirement plan participation. But it also signals to employees that their financial wellbeing matters, can improve morale, and employee retention . Additionally, contributions are tax-deductible and there may be employer tax credits and other incentives available.

This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.