Making sure employees' "golden years" live up to their name

If you’re noticing a decline in contributions to your company’s 401(k) program, there may be costly morale issues to worry about.

When the economy’s down or times are tight, it’s tempting for people to hold onto more of their paycheck (or dip into savings they’ve already started) to pay mounting bills. They spend more time worrying about personal finances than actually working, and every dollar they’re not contributing to a 401(k) plan potentially weakens retention.

But declining contributions mean more than bad news for the health of a plan — it hurts employees in the long-run. Every dollar trimmed from a retirement contribution puts more money into someone’s pocket in the short-term, but they’ll have less once they stop working. Or worse — they’ll have to work for years longer to make up for the difference.

It’s the same old 401(k) explanation, but the declining market makes people want to ignore it and jump ship as soon as they can.

There are three sure-fire ways to get and keep employees’ interest high in retirement contributions:

• Keep it simple. Plans with the highest enrollment and contribution rates are explained clearly and often, and usually have an automatic enrollment feature. This works especially well for new hires and people on the fence about contributing. Removing the complicated bells and whistles from a program makes it easier for people to start saving.
• Match it. No surprise here: Employees are more willing to put money away when a company matches a percentage of their contributions. The higher the match, the more they’ll want to kick in.
• Rely on tech help. It’s easier than ever for people to get info on how well their money’s performing, and you can use that to your advantage. Plan sponsors can easily get numbers to people, and that’ll get their minds off of retirement and on important business tasks.

The more stable a company’s employees are with their 401(k) contributions, the better — helping them feel as financially secure as possible improves focus and productivity while boosting long-term retention.