Employee Compensation Strategies: Track Trends Monthly or Overpay for Talent

Blog / Employee Compensation Strategies: Track Trends Monthly or Overpay for Talent

Employer Retirement Offerings

Retirement benefits have always been one of the most important benefits that employees expect from employers. Surveys have also revealed that employers, on the other hand, place retirement benefits at the top of the list of essential benefits offered to employees. The 2022 SHRM Employee Benefits Survey revealed that 82% of employers consider retirement benefits necessary. This figure is a 27% jump from the 55% recorded the previous year, just after the pandemic. However, retirement benefits aren’t the only benefit affected, as the importance ratings of many other benefits changed during the height of the pandemic. 

According to Brian Anderson, an expert financial services industry journalist currently serving as the managing director of 401(k) Specialist, “U.S. employers strongly reaffirmed the importance of offering retirement benefits to employees.” In SHRM’s recently concluded survey, 3,129 participants representing independent organizations were interviewed, and the respondents were asked to identify what employee benefits their organizations offered during the plan year 2022. More employees prefer retirement benefits now than before.    

The 2022 SHRM Employee Benefits Survey was conducted from January 11 to February 28, 2022. Noting that the recent attention on retirement plans is probably due to the impact of the pandemic in shaping what benefits matter the most to employees, SHRM’s report also showed that retirement benefits now rank as the second-most important type of benefit along with leave benefits. Healthcare remains the most crucial benefit that U.S organizations can offer their workers. 

Most Organizations Continue to Offer Traditional 401(k)

Brian says, “In the 2019 SHRM survey, 93% said they offer a traditional 401k, and 59% said they offered a Roth 401k. In 2015, just 48% offered a Roth 401k.” But right now, as revealed in SHRM’s recent report, 94% of organizations are offering a traditional 401k, and 68% showing a Roth 401k.

Brian notes that “many of those employers also provided some type of employer match to those retirement plans, with 83% contributing to traditional 401 k plans and 76% contributing to Roth 401 k plans.” An average employer, for example, provided a maximum percentage salary match of 6.8% for traditional 401k plans and 6.7% for Roth 401 k plans. But the value offered to employees in their retirements will likely change if Sen. Ben Ray Luján’s bill finally makes it through Congress approval. 

However, just 51% of these organizations automatically enroll talents or existing employees in their organization’s retirement plans. Interestingly, this figure has remained the same since the pandemic’s beginning. In addition, about 98% of these companies offer health coverage plans to their employees. Of the respondents, another 72% say they offer a fully insured health plan, while 26% say they offer a self-insured health plan to their workers. Compared to the ratings for retirement benefits, many employers do not pay much attention to healthcare benefits.

Retirement Plan Disclosures: Simplifying Retirement Plans for Workers

Following the introduction of a bill seeking to improve retirement plan fee transparency and plan disclosure requirements in the Senate, most employers will have to improve the quality of their offerings to employees. The bipartisan retirement bill is focused on recommending ways to enhance employee understanding of retirement fees and expenses.

According to Sen. Luján, “But many employees saving for retirement do not understand these disclosures through no fault of their own. This legislation would demystify the retirement process for working Americans, who are bogged down by cumbersome paperwork full of legalese. My bill would ensure the DOL and Congress collaborate to work toward clear and simple disclosures in retirement planning for all workers.”

He believes that “retirement plan disclosures are important tools for retirees and employees to understand the fees they pay, how they are managed, and any conflicts of interest”.