Employee Retention & Retirement Plan

Employee retention is the process companies go through to ensure they have sufficient levels of employees to complete tasks and activities. Retention often relies on different strategies, one of which is offering retirement plans.

Defined

Retirement plans include a wide variety of options, from plans funded 100 percent by employers to an employee-match option. These plans allow employees to place money tax-free into the account and withdraw it at a later date. Lucrative employee retirement plans can help companies retain employees.

Purpose

Companies can use retirement plans as a "forced" retention strategy. For example, companies may require employees to reach one year of employment prior to contributing payments into the plan. Additionally, employees may need to wait a certain period before receiving benefits from the plan.

Considerations

Different retirement plans may exist in a company for different levels of employees. Executives, directors or managers may receive stock options as a retirement plan. This provides more options for retention because these individuals may not sell or trade the stock without some penalties or other restrictions.

References

• HRHero: Employment-Based Retirement Plans
• NC Treasurer: The Effect of Pension Plans on Job Attraction and Employee Retention