Not only do employees want benefits from their employer, they want them more than ever before. According to WTW’s 2022 Global Benefits Attitudes Survey, 60% of employees surveyed cited their employers' retirement benefits as an important reason they remain with their current employer, compared with 41% in 2010.
Small businesses who want to recruit and retain top talent need to consider how they plan to meet their employees’ expectations beyond monetary compensation, including health care, retirement, and other benefits. In this article, we break down Vestwell’s survey results on the benefits team members want most from their workplace.
Quite a bit, it turns out.
In Vestwell’s 2023 Retirement Trends Report, we surveyed nearly 1,300 small business employees on the question of which benefits would be most attractive from a prospective employer. One of our most striking findings was just how important benefits like a retirement plan are, with over 72% of respondents saying they “expect employers to offer a 401(k)/403(b)” in light of the tight labor market. Additionally, while almost three quarters of survey respondents expect a retirement plan to be offered, 98% of respondents said they think it’s important for their employer to provide a retirement benefit.
The key takeaway: a super-majority of our survey respondents saw benefits like a retirement plan as an expectation, rather than an added perk. For those small businesses seeking to upgrade their recruiting efforts, investing in a first-class benefits package may be a prudent decision.
In Vestwell’s 2023 Retirement Trends Report, we asked small business employees “If you are eligible to contribute to your workplace retirement plan, but you have not…what would most motivate you to contribute?”
The following ranking of motivators emerged:
Though a higher salary was the clear winner, offering a higher match can induce a significant percentage of employees to take advantage of the benefits their employer offers. Additionally, 89% of employees surveyed said an increased match is a key benefit for them.
However, other benefits also scored a high interest from employees, both among those already contributing and those who are not. The majority of participants were interested in adding a guaranteed lifetime income stream such as a deferred annuity, with 58% saying they would consider or strongly consider using that benefit. Similarly, employee respondents listed “health savings” as the third most common saving goal, behind only retirement and paying off debt. This aligns well with the interests of small business employers, of whom 66% indicated they were most interested in adding a Health Savings Account (HSA) program.
Vestwell’s 2023 Advisor Trends Report showed that the race is already on to expand benefits and gain a favorable position in the market for talent.
In our survey of over 300 small businesses, we found that almost a quarter (23.7%) of respondents increased their 401(k) match this year. Counting only the employers that did make a change to their plan, we found that 41% of respondents increased their 401(k) match. In other words, employers are already making moves to improve their benefits package and compete in a still-hot labor market.
Employers are also adopting plan features that can reduce the stress of saving for their employees. 31% of employers who made a change to their plan in the last year introduced auto-enrollment. Additionally, 18% of the same group relaxed eligibility standards for plan participation over this time. These changes demonstrate the ways in which employers are boosting their benefits offerings and retention efforts.
If you're looking for a way to increase employee retention, expanding the retirement benefits one offers is a good place to start. Our research shows that employees highly value retirement benefits, meaning they can be a potent tool in recruitment and retention efforts.
Even better, some benefits may also come with sizable tax credits for the businesses offering them. If you are an employer interested in setting up a 401(k) account for your business, you can contact Vestwell to determine if you are eligible to receive substantial tax credits, which can help cancel out administration costs. Interested? Learn more here.