By: Mishelle Becker, QKA
Compliance & Document Coordinator
Everyone wants to retain their high-performing employees. But in the competition for talent, most leaders reach for the same two levers: higher salaries and remote work flexibility. Many organizations overlook a valuable asset that is already sitting inside their benefits package, the employer sponsored retirement plan.
You may also hear this benefit called an employee sponsored retirement plan. Whatever term you use, if your employees view their 401(k) or 403(b) as a line item on their pay stub rather than a cornerstone of their retirement goals, you have an untapped retention tool right in front of you. Here is how to communicate the true value of your employer sponsored retirement plan to new employees and existing employees alike.
Avoid the Value Gap
An employer sponsored retirement plan can be an effective retention tool when employees understand what their retirement plan is truly worth. Although plan sponsors often invest significant time and money into their retirement plans, many employees never fully connect that investment to their own paycheck or financial future.
That disconnect shows up clearly in the data. Employees under age 30 are about twice as likely to miss out on their full employer match as employees over age 60, according to research from Financial Engines reported by SHRM. Younger employees are more likely to underestimate the long-term impact of their 401(k) plan, or simply not realize how much they are leaving on the table. That same employee may leave for a $5,000 raise elsewhere when staying put and capturing the full match could add more to their retirement savings each year.
Candidates and employees cannot consider what they do not clearly see and understand. An employer sponsored retirement plan that is communicated well, with real numbers and real examples, becomes a tangible differentiator. A plan that is buried in a benefits portal does not.
This is the value gap: the difference between what a plan sponsor is offering and what employees actually understand and use. Closing that gap does not require a bigger budget. It requires clearer, more consistent communication.
Help Employees Understand the Value of Their Retirement Benefits
You do not need to make a big investment or overhaul your plan to help employees start understanding the value of their retirement benefits. A few practical, low-lift approaches can go a long way.
- Translate the match into dollars. Instead of saying “we match 50% up to 6%,” show what that match is worth in real numbers for a typical salary. A simple chart illustrating how a $100 contribution becomes $200 can make the value click instantly.
- Highlight the cost of waiting. Use a simple comparison to show the difference between starting contributions at age 22 versus age 32, and explain how time and compound interest can help employees reach their financial goals faster.
- Use total compensation statements. Add the value of retirement contributions alongside salary and other benefits so employees see the full picture, not just their base pay. Seeing their $70,000 salary become $78,000 reminds them that you are investing in more than just what they see reflected in their bank account.
- Time communications around key moments. Open enrollment, raises, and plan anniversaries are natural opportunities to remind employees about their retirement accounts and any other tax-deferred benefits you offer.
- Highlight progress, not just mechanics. Recognizing milestones, like a first year of full participation, an increased deferral rate, or becoming fully vested, reminds employees that their retirement savings are growing.
- Make messages personal. Generic emails get ignored, but a note based on an employee’s actual contribution rate or projected retirement savings is more likely to prompt action.
- Involve leadership. When managers and executives talk about using and valuing the employer sponsored retirement plan themselves, it signals that the benefit matters at every level of the organization.
How Retirement Benefits Can Support Employee Retention
Emphasizing the value of your retirement benefits is not just helpful for your employees, it is a strategic move for the overall business as well.
- Boosts financial wellness. Financial stress is a top driver of lost productivity. Employees who feel on track to meet their financial goals tend to be more focused and less prone to burnout.
- Differentiates your culture. In a field of similar-looking benefit packages, a plan sponsor that offers robust education, a strong matching contribution, or features like student loan matching stands out as an employer that invests in the whole person, not just the role. That is when a retirement plan becomes a genuine recruiting and retention tool.
- Reduces delayed retirement costs. When employees cannot afford to retire, they tend to stay in higher-salary positions longer, which can slow your talent pipeline and add to healthcare costs.
The better your team understands the retirement benefits available to them, and how to make the most of them, the stronger your organization is as a whole.
Where a Third-Party Administrator Fits In
Promoting a retirement plan is much easier when it is designed to fit your company’s needs and when you are not managing it all on your own. A knowledgeable Third-Party Administrator does far more than process paperwork. A good TPA can help plan sponsors put numbers behind the plan, explain how plan features work in plain language, and identify opportunities to make the benefit easier to communicate in the first place.
At Watkins Ross, we have spent over 75 years helping small and mid-sized employers manage their retirement plan administration with confidence. As a boutique, 100% employee-owned Third-Party Administrator, we take a consultative approach built around long-term relationships.
Every client works with a dedicated account manager who understands their organization. Because Watkins Ross is employee-owned, our team has a personal stake in getting it right for every plan sponsor we work with, including helping you communicate your plan’s value with confidence.
The Bottom Line: Don’t Let Your Retirement Plan Go Unnoticed
An employer sponsored retirement plan is one of the most valuable, and often under-communicated, benefits an organization offers. Plan sponsors who make a habit of emphasizing that value, rather than assuming employees already understand it, tend to see a more engaged workforce that recognizes the investment being made in their future.
The plan is already there. Making sure your employees understand it, and making sure it is administered well enough to promote with confidence, is the next step.
If you would like guidance on communicating the value of your employer sponsored retirement plan, or support with the plan design and compliance work behind it, contact Watkins Ross today.
