Introduction
Retirement plan involves setting aside some money for workers of a company in preparation for retirement. A certain amount of money is deposited in each employee’s account as per agreement. Excellent retirement plans accompany other numerous benefits apart from the money set aside. Companies that implement sensible retirement plans have higher chances of retaining workers hence improving productivity. Cooperation can adopt various retirement plans that are in agreement with the needs.
Retirement plans are the schemes that offer benefits to the workers when the employment contract ends. Saving money through retirement plans helps to support the employee financially in the future. Profit-sharing may be included in the retirement plan; it involves contributing in place of the employer.
Proposal
The Human Resource department is entrusted to prepare and present retirement plan proposals for 150 employees in the organization. Workers can get retirement benefits from three prime sources; these include worker-sponsored donation system, societal collateral old-age, and impairment assurance (Martocchio, 2009). This paper focuses on three retirement plans that are popular within various organizations including contribution plans, profit sharing, and pension plans. The traditional pension plans utilize computed theorems to decide a worker’s earning benefits when they retire. The 401K plan system is the total amount of the employee’s and employer’s contribution and stake (Ezra, Collie, & Smith, 2009). The profit-sharing plan is decided by the total sales or by the amount of money set aside for the workers. Nevertheless, privately owned organizations should abide by the standard regulations and practices enacted by the Employee Retirement Income Act of 1974 if they want to qualify for retirement plans. The Act of 1974 established rules and obligations, least funding measures, contribution and interest limits, endowment and accumulation terms, non-discrimination laws, plan termination regulations, and standards for all organizations which want to implement and participate in retirement plans (ERISA n. d.).
Profit sharing plan
A company offers a portion of its profits to the workers through a profit sharing plan. This program is mainly meant for motivating the employees. All individuals who operate large corporations or are self-employed are eligible for profit sharing scheme. Also, all workers who have served for 1000 hours and more in the past year qualify for this plan. If a company adopts this plan, the employees should not contribute. Also, if an organization chooses profit sharing plan, the employer has the power to determine the vest time (Perdue, 1994).
Defined benefit plan
This program determines the full compensation that will be payable to an employee after retirement. The retirement benefit is typically computed using a formula that considers the years of participation and the salary (Defined n.d.). Such that the share reflects a certain percentage of the employee’s salary multiplied by years of service. The retirement benefits are commonly offered as regular payments at the start of the agreed retirement age according to the state laws and provisions of the plan.
Defined contribution plan
This program determines the amount of money that will be set aside for retirement plan at regular intervals. The portion of the money is mainly a certain percentage of the worker’s earnings or a certain dollar amount. The final amount available during the time of retirements depends on various factors including the value of employer contributions, the worker savings and the years of service. Also, the interest earned over that period affects the final amount.
Communicating details to workers
Numerous channels can pass details concerning retirement plans to the employees effectively. Postcards and mailers are the most efficient communication channels. Supply of brochures to the 150 workers is also an active channel of communication. Email reminders to all employees to check the website to choose or alter retirement plans will also work efficiently. Ideally, the organization’s website may also be a convenient means to communicate the retirement plans comprehensively to all the employees. The site should allow employees to select, change and manage their retirement programs. Additionally, the website should keep the retirement plans of particular employees confidential and allow access from any place if one has internet access.
Frequency of Communication
The 150 employees should be supplied with brochures explaining various retirement plans during the Annual General Meeting. Also, if any employee seeks clarification at any other time, in-depth information should be available on the organization's website. Upon promotions or demotions, change in salary or at the date of retirement an employee should also have access to retirement plans. Offering workers with retirement plans details when they get an increase in pay is critical as it gives them a chance review their current plan.
The organization should also pass details about retirement plans when sending quarterly emails to emphasize on the importance of signing up. Also, employees will be reminded to re-evaluate their current plans and decide if they want to change. Emails also remind workers to check changes that may have taken effect on various retirement plans.
Tools and Methods
There are various modes that the company can use to make sure it reaches all employees while passing the correct information concerning the available retirement plans. First, the company can organize online or live seminars to persuade the employees to adopt retirement programs. The dates of the workshop should be communicated earlier through the organization's memos and notices. These workshops should be open and free to all workers; although all information about retirement plans may not be addressed, the importance of saving should be stressed. The outcome of such seminars should be a powerful appeal as to why each attendant should sign up for a retirement plan (Cornelio, 2012). Importantly, the information about retirement plans should be communicated positively in these seminars to avoid discouraging the employees.
Examples of real life retirement plan that has helped people in the past should be part of the agenda. Such stories encourage participation and consequently drawing more employees to embrace the saving schemes. During the seminars, workers will have an opportunity to calculate their contributions and forecast the amount they can have in their accounts at the time or retirement. Moreover, workers get a realistic view of how setting aside a small portion of their salary can grow to large amounts over time. The organization can emulate other large corporations that invite experts during seminars. The employees will tend to believe and adopt the advice of a person outside the company than from a fellow employee. Before the organization settles on the right expert to invite to its meetings, a background check should be done. The company should be confident that the particular expert will deliver the right information to the employees. He/she should have a broad understanding of various retirement plans offered by the organization. Above all, he or she should have excellent communication skills and convincing power. Sometimes, employees from a different company who are participating in saving schemes can also be invited. The organization workers will adopt a system if it is used elsewhere and proves to be beneficial. Nevertheless, any invited guest should not pass false information to the employees trying to lure them to sign up for the retirement plans. Combining these communication modes along with a detailed website and brochures with detailed information and a phone number to call if any employee requires any clarification will help to make sure more workers participate in the saving schemes (Cornelio, 2012).
How to overcome opposition towards the retirement plans
Opposition to participation in various company programs is common. Thus, the organization should put place some measures to overcome resistance. Every employee should be comfortable with the retirement plans that are in place. First, communication should be effective to make sure all the employees feel like part of the changes. Most importantly, the discussion should be centered on the future benefits that will accrue due to current savings. Second, the company should call upon some of the workers to act as promoters of the plan. By doing so, fellow employees will get information from the participation members, and they may get encouragement to adopt the scheme. Last, make the employees understand that they are saving towards their future life.
Enrolling Employees
Mostly, retirement schemes offer numerous benefits to the workers. For many workers to adopt the plan, the organization should point out the advantages that accompany saving programs. One of the major benefits is the employer matching contributions since it includes donations distributed to the workers. Tax decrease is another advantage to the employees who adopt retirement schemes. Finally, employees who participate in retirement plans have a good sum of money ready in case they need it. These three aspects are fundamental when passing information to workers. The aim is to convince the employees that, apart from saving some portion of their salary, they are also getting free money from the employer. In essence, communication acts as an encouragement to lure the employees to adopt these benefits.
Communicating the retirement plan
If the employer offers compelling incentives and winning employer match, he will give the 150 employees a good reason to work with the company for long. The 50% percent of the first 6% is the standard matching program. As per this scheme, the employer contributes 50 cents for each dollar the worker gives. Once the employee’s contribution reaches 6% of the pay, the employer’s contribution will hold up to the next year. For example, if the worker earns $50,000 per annum and he contributes $3,000 of that salary, the maximum amount provided by the employer is $1,500. However, there may be some limitations according to the company regulations and provisions of the retirement plan.
Conclusion
Retirement plans are very vital in any organization. The three retirement schemes proposed in this paper, contribution plans, profit sharing and pension plans will suit the 150 employees since they are in line with the Employee Retirement Act of 1974. Postcards, brochures, emails and the company website are some of the tools that will be used to communicate the retirement plans. The organization can pass information to the employees when sending quarterly emails if an employee gets an increase in salary, change in position and during retirement time. The retirement plan information should be accessible through the organization's website anytime and from anywhere. Seminars serve as best forums to discuss saving schemes. During the workshops, all the benefits of the retirement plans should be discussed in details. Conclusively, the organization should not force employees to adopt the retirement plans; instead, the individual workers should make a decision after understanding the benefits and provisions of the schemes.
References
Cornelio, C. (2012). 5 Critical Elements of Retirement Plan Communication. Retrieved from <http://www.benefitspro.com/2012/11/12/5-critical-elements-of-retirement-plan-communicati?page=6>
Defined benefit plans vs. Defined contribution plans. Retrieved March 19, 2016, from < http://www.myretirementpaycheck.org/retirement-plans/defined-benefit-plans.aspx >
Employee Retirement Income Security Act – ERISA. Retrieved March 19, 2016, from <http://www.dol.gov/dol/topic/health-plans/erisa.htm>
Ezra, D. D., Collie, B., & Smith, M. X. (2009). The retirement plan solution: The Reinvention of defined contribution. United Kingdom: Wiley, John & Sons., D. D., Collie, B., & Smith, M. X. (2009). The retirement plan solution: The Reinvention of defined contribution. United Kingdom: Wiley, John & Sons.
Martocchio, J. J., (2009). Employer –Sponsored Retirement Plans and Health Insurance Programs.
Perdue, P. D. (1994). Qualified pension and profit sharing plans 2004. United States: Warren, Gorham & Lamont.
