Executive: To make employees save, automatically put them in a retirement plan
- A Principal Financial Group executive tells companies that if they want employees to save for retirement, they should automatically put them in a retirement savings plan, reports Employee Benefits News. Gerald Patterson gave this advice to participants at the annual conference of the Foundation of Employee Benefit Plans in Orlando.
- Patterson said that by automatically putting employees in a retirement savings plan, companies are putting less emphasis on plan education and more on behavioral changes. He warned that not saving enough retirement money and deciding to go back to work might not be a practical strategy for employees as they age.
- The changes in the way people work, such as working remotely in greater numbers, having different priorities and preferences, and focusing on healthcare as the ultimate benefit, overshadow conversations about retirement savings while making them even more important than ever.
Companies, especially small businesses, that can’t afford to offer employees a 401k plan might think about offering a MyRA plan. This Roth IRA is for long-term retirement savings and can help people with little to no savings who want to start putting money away.
More generally, employers have been struggling against a knowledge gap regarding retirement for some time. New technologies have emerged to help with retirement planning, including accessible mobile apps and improved personalization. Having employees instead need to opt out of a retirement plan, rather than opt-in, could help bridge the gap, especially among younger employees.