Match point: The benefits of matching retirement contributions
A winning strategy for retirement plan participation seems to be the presence of a matching contribution. According to a study by LIMRA1, a matching contribution is “the single most significant factor” in determining whether individuals contribute to a retirement plan. In fact, the study found that the presence of a matching contribution nearly triples the odds of an employee participating in the retirement plan.
If you are interested in increasing employee participation in your retirement plan and your plan already offers a matching contribution, GuideStone can help you prepare materials that educate your employees about the benefit of your matching contribution. Your relationship manager can also work with you to analyze your matching plan design and see if there is a better way to structure your matching formula to help increase participation and meet the goals for your retirement plan. (For an example of a matching plan design that seems to increase participant contribution levels, see our re:source article titled, Increasing employee participation rates without increasing costs.)
Beyond just increasing participation, some GuideStone clients have stated they feel a matching contribution helps employees take more ownership in providing for their retirement needs. Simply put, when a match is offered, many employees take the initiative to contribute to their future; a step they weren’t likely to take otherwise.
If you would like to know more about the benefits of a solid matching contribution formula, GuideStone is ready to answer your questions, help you find a formula that works and serve your organization’s goals.
1From the study titled, The Plan Participation Puzzle: Comparison of Not-for-Profit Employees and For-Profit Employees (2010). LIMRA has 90 years of financial service industry experience, along with resources in research, consulting, assessment, development, and compliance and regulatory services. For more about LIMRA, visit www.limra.com.
This information should not be considered tax or legal advice. GuideStone stands ready to assist your organization as you work with your legal and tax advisers by providing resource information that you and your adviser may find beneficial.