Article

Boosting Employees' Savings and Keeping Talent

Few employers still offer pension benefits, but many have company-sponsored retirement plans, like a 401(k) or 403(b). Employers concerned about losing top talent might consider generous matching contributions to the company-sponsored plan as a retention tool.

January 18, 2025
Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

Employer-sponsored retirement plans, such as 401(k) or 403(b) plans, have become an essential part of the benefits package offered by companies to attract and retain employees. One of the key features of these plans is the employer's matching contribution, which can vary from company to company.

A relatively small number of employers offer generous matching contributions, exceeding the standard dollar-for-dollar match, to enhance their recruitment efforts and compensate for discontinuing defined benefit pension plans.

Let’s examine how these rich matching contributions can boost employee savings and support recruitment and retention efforts.

Attracting and Retaining Top Talent

In today's competitive job market, companies are constantly seeking ways to attract and retain top talent. Offering a generous employer match for retirement savings plans is one such strategy.

Employees who feel that their employer is invested in their long-term financial well-being are more likely to stay loyal to the company. Moreover, candidates comparing job offers may be swayed by a more attractive retirement savings match, making it a valuable recruiting tool.

The Decline of the DB Pension Plans

Many companies have phased out traditional defined benefit pension plans, which guarantee employees a specific income upon retirement. These plans have become less popular due to the financial risks and costs associated with maintaining them.

By offering a richer matching contribution for their defined contribution plans (e.g., 401(k) or 403(b) plans), employers can help offset the loss of the guaranteed income provided by pension plans, ensuring that their employees can still build substantial retirement savings.

Fostering Financial Security

Employers who are concerned about their employees' ability to retire comfortably may choose to provide a more generous match to help workers build their retirement savings faster. A rich matching contribution can significantly accelerate the growth of an employee's retirement savings, reducing the risk of financial insecurity in retirement.

This not only benefits the employees but also helps to establish a positive company culture where workers feel supported and valued.

What Employers Can Do

While relatively few employers offer rich matching contributions for their employees' retirement savings plans, those that do so reap numerous benefits. By demonstrating a commitment to their employees' long-term financial well-being, companies can foster loyalty and trust, which ultimately contribute to a more successful and prosperous organization.

As the job market continues to evolve, employers may want to consider exploring richer matching contributions as a means to gain a competitive edge in attracting and retaining top talent.

Other content you may like

  • Mid-Quarter Roundtable Highlights

    Podcast Highlight - Mid-Quarter Recap: Bonds, Markets and U.S. Dollar

    November 28, 2022
    Enjoy this highlight clip from the Strong Valley Mid-Quarter Roundtable discussion.
    Read this Article
  • Planning for Your Financial Future

    Planning for Your Financial Future

    April 5, 2023
    Money plays an important role at every turn your life takes. There are ways to develop good financial habits now so you can be prepared for the different strategies that certain events require in the future. And the good part is, you can start from wherever you are currently, to make decisions that will go a long way towards achieving your financial goals.
    Read this Article
  • What's Driving the Market

    Podcast Highlight - Debt Ceiling Resolution

    June 21, 2023
    Congress recently passed a debt ceiling deal that is still being analyzed and politicized across the nation. The team gives their insight on what the fuss is all about and how the system works when a debt ceiling reaches an impasse.
    Read this Article
  • Mid-Quarter Roundtable Highlights

    Podcast Highlight - More Adjustments to the Federal Fund Reserve Rate

    November 30, 2022
    The team offers their predictions on where the Fed Funds may be going in the New Year, with a recap of what has happened this past year, especially in relation to bond performance.
    Read this Article
  • The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.
    phone-handset