Have You Benchmarked Your Employee 401(k) Program?

Have You Benchmarked Your Employee 401k Program - Have You Benchmarked Your Employee 401(k) Program?

According to the American Benefits Council, 401(k) plans are the most popular type of employer-sponsored retirement plan in the nation. In fact, 99 percent of employers who responded to the Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey indicated they now sponsor a defined contribution plan. A WorldatWork survey even found that 88 percent of companies offering a 401(k) with a matching benefit continued to match employee contributions during the recent recession.

While 401(k) plans can produce meaningful retirement benefits, the overall success of any organizations’ employer-sponsored retirement plan is determined by its quality. It’s important to benchmark your program regularly against market norms for many reasons, including the following:

Benchmarking is required by law – Employers must monitor the cost of any 401(k) program they offer according to the Department of Labor. A benchmarking report will include an analysis of all the fees associated with the program, enabling you to compare them to market norms.

Benchmarking is usually free – Your 401(k) benefit advisor should be able to create a benchmarking report or contract with a third party to produce one for you free of charge. Worst case scenario, you can enlist the assistance of an independent third-party provider to conduct the benchmarking process for a reasonably small fee.

Benchmarking protects your employees – Benchmarking reports should include information on 401(k) plan complexity, participant (employee) fees and participant (employee) success in addition to a detailed accounting of employer fees. Unreasonable fees charged to plan assets (participant accounts) by investment managers, administrators and record keepers can quickly eat into retirement earnings. Even 1 percent in unnecessary costs can suck hundreds of thousands of dollars out of plan balances over time.

Benchmarking protects your company – A lack of due diligence can lead to expensive audits and even lawsuits. According to the Department of Labor, 75 percent of the 401(k) plan audits conducted last year resulted in fines, penalties or reimbursements. Several groups of 401(k) plan participants have been successful in securing legal victories over their employers for failure to address excessive fees associated with their retirement program. Maintaining a file of 401(k) benchmarking reports illustrates your intention of exercising due diligence in regards to administrative and investment management fees and expenses.

Benchmarking has become a standard – Retirement plan fees are continually changing. If you want to stay on top of the costs associated with your employer-sponsored 401(k) program, annual benchmarking is definitely time well spent.

In addition to regular benchmarking you may want to periodically request bids from at least three 401(k) service providers or ask your benefits plan advisor to do so. Analysis of competitor bids will allow you to make an informed decision on the quality of the retirement plan you’ve sponsored for your employees and make adjustments as necessary.




Wellness Programs Have a Direct Impact on Job Satisfaction

Wellness Programs Have a Direct Impact on Job Satisfaction - Wellness Programs Have a Direct Impact on Job Satisfaction

We all know that unhealthy lifestyle choices increase the prevalence of chronic disease in our society as a whole as well as within our nation’s workplaces. Employees who are sedentary, practice poor nutrition or use tobacco products are more likely to suffer from dangerous conditions such as diabetes, heart disease and cancer. Not only do these diseases decrease quality of life and lead to premature disability and death, they also cost employers money.

When employees are unhealthy, productivity suffers. Chronic illness increases absenteeism and reduces performance, a powerful one-two punch to any business bottom line. Fortunately, workplace wellness programs can help employers mitigate losses. Through preventative education and incentives, these programs encourage workers to adopt healthier diets, find time to exercise, and make other important lifestyle changes to improve their health. They also have a direct impact on job satisfaction.

Many Employers Offer Wellness Programs

In a study sponsored by the U.S. Department of Labor and the U.S. Department of Health and Human Services, nearly half of U.S. employers reported offering some type of workplace wellness program. Among them, 80 percent included nutrition and weight loss counseling in their offerings. Seventy-seven percent offered smoking cessation assistance. All of these activities had a positive impact on business profitability. In fact, according to a study conducted by Aflac, 61 percent of employers report increased profitability due to their workplace wellness programs.

Wellness Programs Impact Employees

Research has shown that employees who work for companies offering wellness programs are more satisfied with their jobs. In one survey, 67 percent of respondents said an employer-sponsored wellness program shows the company cares about them. Sixty-seven percent also responded that they’re more likely to recommend the workplace to other job seekers as a result.

In addition, the Department of Health and Human Services’ study revealed wellness programs regularly result in statistically significant improvements in exercise frequency, weight control and smoking reduction—enhancing employee quality of life both inside and outside the office.

Employers Should Make the Most of Workplace Wellness Programs

Hiring and retaining top-notch employees is a concern for employers in many industries. A competitive benefits package often makes the difference when a candidate is considering multiple offers or a current employee is contemplating a job change. Fortunately, many professionals view a workplace wellness program as a valuable addition to the traditional benefits bundle.

Of course, employers must first ensure these professionals are aware that such a program exists at their organization. In the case of new hires, this can be accomplished by outlining the program in job advertisements as well as discussing it with candidates. According to a study by Virgin Health Miles/Workforce Magazine, 87 percent of employees consider wellness packages when choosing an employer.

Employers should also regularly review their organizations’ wellness offerings with current employees. Seventy percent of workers feel workplace wellness programs have a positive impact on their work culture. An employee who enjoys the culture of his or her workplace is more likely to be satisfied by the job at hand.

Finally, consider including incentives in your workplace wellness program to boost participation. In the Workforce Magazine survey, 78 percent of respondents indicated that rewards are important. Sixty-one percent reported the availability of incentives was the key reason they chose to participate in a wellness program.

If you’d like to learn more about workplace wellness, creating a wellness program, or increasing participation in your current program, consult your benefits advisor.