by Mark Ruzicka
Emerging Retirement Plan Trends – How Corporations Are Making Themselves Attractive
Recently, President Trump signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to help those affected by the coronavirus pandemic. The idea is to help organizations make up to employees affected by the pandemic – including new corporate retirement plans for affected retirees.
With the recent changes the world is going through, corporations are restructuring themselves worldwide to accommodate these changes. And to make sure employees remain steadfast through this tough time, more and more benefits are being introduced.
Here are four emerging trends that businesses are adopting to further that cause.
1. “Stretching” Contributions
Employers have now started to "stretch" their 401(k) contributions, meaning that they’re increasing how much they pay into their employees’ retirement accounts. Although this means that employees also end up paying more, the thought of increased savings is something that employees can get behind.
The main goal is to be more generous with the 401(k) match along with ensuring that employees have a vested interest sticking with the company and retiring.
2. Health Savings Accounts
Although the concept has been around for a while now (since 2003), Health Saving Accounts (HSAs) are now growing in popularity as a corporate retirement benefit across the board. The idea is not just to save for healthcare needs that may arise in the near future, but also to make a reserve for medical costs after retirement.
Those who do not use HSA funds or simply go out-of-pocket to pay for medical expenses till the time they read the age of 65 can then withdraw the amount without paying any extra tax on it. However, if the amount withdrawn is for expenses other than medical, the amount will be taxable just as any other distribution from their IRA (Individual Retirement Account).
3. More Self-Service Tools & Service Quality
Not too long ago, employers were mostly concerned with choosing a corporate retirement plan solely based on what they get and for how much. Although the regard for costs still remains, the core focus has moved on to more pressing matters; service quality and better tools.
The type of service they get and the support included for plan participants (including self-service tools) have become more important. The determining factor; improved access to plan information.
4. Enhanced Financial Education
More than 25% Americans struggle with their savings – either because they’re in debt or simply because their income doesn’t cover their expenses sufficiently. Along with provident funds, employers are now moving toward financial wellness resources and financial education as part of their corporate retirement plans.
The idea is to give them educational resources and financial advice so that they can ultimately better manage their finances and assess their retirement readiness.
At Centric, we specialize in helping businesses choose the best corporate retirement plans that benefit you and your employees, conduct due diligence on your behalf, ensure maximum compliance, and more. If you’re ready to enhance your employee’s relationship with the company, get in touch today and let us help!