Smart employers are looking for a competitive edge when it comes to attracting and retaining talented workers, something that goes beyond gimmicky perks, such as free snacks and branded swag.
Experts suggest that a company-sponsored retirement savings plan can connect with employees in a much more meaningful way.
To help local business owners gain an edge in the fight for talent and better understand how to implement a retirement plan, OBJ and sponsor Meldrum Horne recently teamed up to explore the issue.
This is an edited transcript of a discussion between Meldrum Horne partners Jamie Meldrum and Michael Horne and OBJ publisher Michael Curran. To hear the full interview, please watch the video above.
CURRAN: Why should a company consider a retirement savings plan?
HORNE: They can be very useful, especially as an attraction and retention tool. We know there’s a talent shortage and it’s highly competitive. Recent studies show one in three employees are looking to change jobs, and a company with a retirement plan could sway an employee’s decision. They also help companies recognize employee loyalty and years of service, which demonstrates a high level of commitment from the company as well.
CURRAN: Jamie, there are several options available for employers. What’s the difference between some of these?
MELDRUM: There are two distinct pension plans available. One is a defined benefit pension plan, which is when an employer doesn’t know what the cost of the benefit will be, it is given to the employee at their retirement and is based on years of service. This is what you would see in the government and it has a massive liability to organizations, so when we are referring to pension plans this is not the approach we use. A defined contribution pension plan is based on defined contributions by both an employee and an employer which is offered at retirement, which can be extremely helpful to employees.
CURRAN: What would an employer for a small group of people need to get started?
HORNE: They are easy to setup! A retirement plan is really just a function of payroll. If you have a $100,000 payroll in your company and you wanted to start a three per cent matching program, it would be a three per cent contribution by the employer of the $100,000. You can also set up voluntary plans for staff if the employer doesn’t have the budget to set up matching contributions yet.
