Raise Your Company’s 401(k) Participation with Employee Representatives
posted by Fisher 401(k) October 23, 2018
There are many benefits for an employer to increase company 401(k) participation rates, including easier compliance testing and increased retirement preparedness among employees. To that end, there’s a lot an employer can do, from offering an employer match to adding auto enrollment features to make it easier and more attractive for employees to save. But is it all on the employer’s shoulders to encourage saving among employees? Not necessarily.
In fact, research shows that your employees will be more encouraged to save if they see their peers doing the same, which creates an opportunity for employers who want to increase participation rates. Identify employees from among your ranks who are actively preparing for retirement using the company 401(k) and empower them to act as role models. You can harness the power your employees have to encourage each other to enroll and start saving.
“22% of employees depend on their coworkers for 401k information.”
Fisher Investments 401(k) Solutions, 401(k) Wellness in the Workplace Study.
Start by speaking with employees who aren’t executives or 401(k) administrators who have had a positive experience saving in your company’s 401(k) and empower them as advocates to help other employees work toward retirement readiness. Ask them to be a resource to their peers for helping find answers to their questions about retirement, or ask them to join you in sending out the occasional email about saving. Perhaps when a millennial employee reads a stat that hits close to home—that Millennials are saving a median of 10% of their income, for example, with a third saving up to 15%—they’ll see both that their coworkers are serious about retirement saving, and also pick up on a broader social cue that they might want to think more closely about planning for retirement.1 After all, a survey found that 37% of people felt like they were behind their peers when it comes to things like saving, and nearly the same number said that this feeling was enough to motivate them to make better decisions about finance.
If you find success with this tactic, you could take it one step further by formalizing an employee 401(k) committee. Some businesses find success asking a small number of employees to represent the rest by asking questions on behalf of employees, by reviewing plan documents and providers, and sometimes even by helping make plan management decisions. There are many forms an employee 401(k) committee can take, so review this article about employee 401(k) representatives to find answers to some frequently asked questions and consider what your committee might look like.
Give your employees the resources they need to start inspiring each other, and you might be surprised to see just how powerful a peer’s example can be. Make sure your 401(k) service provider is there to do the same, offering plenty of educational support and guidance like one-to-one counseling with retirement specialists, to help your newly enrolled employees get started saving with confidence.