In a previous post, we have discussed how an employee end of service plan is important for the long-term sustainable growth of your company. Now, the question is there are different types of workplace retirement plans and it is easy to get lost in the midst. So, how do you really create a workplace retirement plan that works for your employees, keep them happy without putting you, as a business owner under the burden of heavy-duty administrative work or ludicrously high fees! There are 4 things to look for:
You should be very clear to your employees right from the beginning of employment that what percentage of the base salary will you contribute every month towards the workplace retirement plan. It should also clearly define how the contributions might change over the period of employment and the vesting schedules (If applicable). However, it’s also about transparency from the fund manager’s side. There shouldn’t be any hidden terms, the employees should have a clear understanding of how the fund operates, what kind of returns can be expected and as the employer, your duty lies in choosing a fund manager that works for the best interest of your employees. The terms and conditions should be laid out clearly to you and the employee, period!
Flexibility to choose a suitable workplace retirement plan
What should never happen with a workplace retirement plan? Your employees should never run out of options when they browse through the options which may work for them. Remember, based on the age, financial situation and risk appetite, the same fund will not work for everyone. The retirement plan fund advisor should help your employees make an informed decision. Not everyone is financially savvy and details of where the fund is investing should be laid out clearly in layman’s terms. There should also be flexibility for employees to add their own contributions on certain months or on a recurring basis if they want. The process of rebalancing the fund (Where one can change which financial instruments the money is invested in, for example, different stocks, bonds, ETFs, commodities etc.) should be fairly simple too.
This one is a low brainer. The DEWS scheme has its heart at the right place and the intentions are noble, however, one thing that is difficult to understand is its high fees. The fees you pay there can be as high as 1.33% yearly, whereas returns can even be lower than that depending on the market situation over a particular year – this is way higher than a lot of other countries with a workplace retirement plan.
The ideal workplace retirement plan should have low fees that work for both you as a company and your employees. This improves the return that employees will eventually receive and therefore helps you with keeping your employees happy. Plus, there should never ever be any hidden fees in a workplace retirement plan.
A workplace retirement plan that works long-term
A workplace retirement plan should turn out to be profitable over the long-term. If your employee decides to go for an investment plan which has its return linked to market conditions, then, there will be short-term volatilities and they may see their capital getting reduced. This may freak out many, particularly for those who are not really knowledgeable about investing in markets. A workplace retirement plan should not only work long-term (Provide good returns over a considerable amount of time which, we, at FinFlx, can boast about achieving given past performances of the funds managed by our advisors), but also, educate your employees about how markets work, what are the risks and how to reduce risk. A good workplace retirement plan will ensure that the employees will have enough knowledge about different investment schemes and can make the most informed decision about where to invest. There should be fixed return, zero risk plans for someone choosing for such plans as well.
If you are looking for a workplace retirement plan that does all the heavy lifting for your business, look no further, FinFlx is at your service! You don’t have to believe our words, just book a demo and see how the platform works for yourself.