Overview: The days of guaranteed employer-provided pension and health insurance are long gone. These days, employees are primarily responsible for ensuring they can retire comfortably. This is not always easy, since many employees start saving too little too late.
Even though the rules of the game have changed, employers can still serve as a valuable resource to employees when it comes to retirement planning. Employers can be proactive in their efforts to educate employees on the importance of saving for the future; encourage employees to contribute to a retirement plan; explain how investment strategies change based on factors such as age, the number of years left to retirement and individual goals; ensure employees fully understand their retirement plan's periodic benefit statements and other materials available to them including the plan's Summary Plan Description (SPD); and encourage employees to research retirement planning options on their own or with a financial planner.
Employees that receive education and support from their employer have a better understanding of what they need to do in order to prepare for retirement.
Trends: Employers continue to be creative in their efforts to educate employees on the importance of saving for retirement and retirement planning in general. More than likely, auto-enrollment and escalation features will become more prevalent as a means to help employees invest for their future.
Author: Tracy Morley, SPHR, Legal Editor
Updated to reflect FAQs on the fiduciary rule published by the Department of Labor.
Updated to reflect 2017 inflation-adjusted amounts.
Updated to reflect 2017 FICA tax rates and benefit amounts.
Updated to reflect IRS final regulations defining 'spouse' for federal tax and benefits purposes.
In the interest of encouraging retirement savings to protect the economic security of older Americans, the Department of Labor's Employee Benefits Security Administration has issued a final rule guiding states on how to design payroll deduction savings initiatives with automatic employee enrollment (auto-IRAs) without being preempted by the Employee Retirement Income Security Act (ERISA). The final rule also provides guidance to the employers that eventually may be required to offer such programs to employees.
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