Retirement could often seem like something far off in the distance for many employees. While this may be true for some, it is important to plan and prepare for retirement as thoroughly as possible.
Until employees have access to payroll and HR software information, it will be even more difficult for them to gain a full understanding of the options available to them. Additionally, HR teams must be willing to work with employees, ensuring that they realize when savings options are available through the company and how they can achieve savings goals.
A recent Los Angeles Times article cited data from the Economic Policy Institute, which performed an analysis on retirement plans and how employees view them. The report further underscored that many workers do not understand 401(k) plans, don’t save enough money and invest too conservatively to sustain themselves through old age.
Specifically, the study found that only 52 percent of middle-income households had 401(k) accounts. Additionally, among homes that were in the top 20 percent of the income bracket, 88 percent had a 401(k) account.
With the right HR software system in place, human resource teams can work with staff at all levels—and at all levels of income—to help them pinpoint what savings options are best for the needs.
Participation will follow understanding
Brightscope is a company that gathers information on 401(k) data, and reported that businesses that can offer low fees and high account balances tend to have better participation rates. However, the organization added that many employees will avoid such savings options because they don’t understand them.
Brooks Herman, head of data and research at Brightscope, explained to CNN Money that saving for retirement often isn’t a priority for employees who have to make car payments, rent payments and save for everything else.
Plan participation rates are crucial, Herman explained, even when perks—like low fees or a generous company match—are thrown into the picture.
“(It) is really the global check of, ‘Not only can employers provide but do people understand it’s important?'” Herman asked.
No business can guarantee that its employees will participate in 401(k) programs or other savings options, but it is essential that staff at all levels understand what their options are. With a comprehensive and accurate HRIS software system, companies can rest assured that their employees can access all information they need.