By random circumstance, I’ve had three of the most boring HR-ish types of conversations in the past month about 401(k)s!
Can you imagine me talking about 401(k)s? It’s so, well, just regular old HR talk!
One conversation was with our banking partner (and a shout out to PNC and our 33-year business relationship with them that I value that greatly!), and two others were with trench HR peers, but all three conversations were about the exact same thing — auto enrolling employees into your company’s 401(k).
Why you need to help employees with their 401(k)
This is actually a really polarizing topic in HR, I’ve found. It comes down to two schools of thought:
- HR Pros who believe auto enrolling is helping their employees; or,
- HR Pros who believe they are infringing on the privacy of their employees by auto enrolling them.
I’m in camp No. 1! In fact, I’ll go on record in saying that auto enrolling your employees into your 401(k) plan is the single greatest gift you can give to your employees over their career with your company. Bam! I said it.
Let me give you a few facts about employees:
- The majority of your employees that are under 30 have no idea they should be saving for retirement – when it’s the most important time to do so.
- The majority of your employees — at any age – don’t save enough for retirement.
- The majority of your employees think a magical fairy will come along at age 65 and pay for them to live for the next 25-30 years.
These are all actually true!
How Auto Enroll can make a difference
Most people don’t think about retirement and the amount of money it will take to retire until they get to be around 50. At that point, it’s too late and they are then on a path to be a senior citizen greeter at Walmart.
HR can change all of this, because HR can ensure that when your employees get to be around retirement age, at least they might have some hope of sitting around enjoying not working! It’s easy. It’s called Auto Enroll – check it out.
If it’s so good why aren’t all companies doing this?
It’s America, right? We hate being forced to do anything. “What!? You mean your going to force me to sign up for 401 (k) and save for my future! How dare you! This isn’t Russia!”
Want to take 401(k)Auto Enrollment one great step further!? Auto Enroll your employees and have 3 percent taken out of their pay automatically as well. Just auto enrolling really does nothing but make it easy for people to start saving, but you can actually auto enroll and start them out with an automatic deduction of your choosing. The employee at any time can choose not to participate and stop the deduction, but very, very few ever will!
Can you imagine the difference you could make in your employees life by forcing helping them start saving for retirement? For many of your employees, it would be the best thing HR ever did for them, period.
This was originally published on Tim Sackett’s blog, The Tim Sackett Project.