Rethinking Your Benefits Strategy

by Kyle Rose

Want to hire and retain the best employees? Bring on the benefits!

One of the greatest challenges facing employers today is talent acquisition and retention. Spurred on by savings from the Tax Cuts and Jobs Act and low unemployment rates, many employers are rethinking their benefits strategy to maximize their return on investment.

While the traditional one-time bonus is undoubtedly appreciated by employees, certain benefit enhancements can be more valuable in the long run—and make the difference in attracting and keeping talent. Some benefits may bring greater loyalty to your company, as benefits are usually tied to a company’s culture, and can create an increased connection between the company and the employee. Here are some of the changes employers are currently turning to:

Medical Benefits
Cancer care benefits, critical illness insurance, fertility benefits, and life and disability insurance top the list for sweetening traditional health benefits. Many of these options have been voluntary in the past, but are switching to being employer-sponsored. Employers are also considering holding health insurance premiums static or even lowering them.

Paid Leave
Increased maternity and paternity leave dominates the discussion on paid leave benefits. Numerous well-known companies—including Lowes, TIAA, Walmart and CVS—have already made enhancements in late 2017 and into 2018.

Other Considerations
Some additional benefit modifications include offering pet insurance, free fruit and snacks around the office, adoption assistance programs, student loan repayment programs, enhancements to education and tuition reimbursement, and identity theft protection.

Retirement Planning
Some of the most impactful changes are those made to an employer’s retirement plan. Most employers agree that their goal is to have more employees enroll in their retirement plan, contribute regularly to build a reasonable amount for retirement, and allocate their assets among funds in an appropriately diversified way. While education for employees is usually offered, it is not always utilized, resulting in inaction from the employee.

Certain nudges, changes to employee onboarding design, and modification of plan features can yield dramatic results. Here are several of the top changes to retirement plans that employers should consider making:

  • SIMPLE IRA plan. If you have a small business, have fewer than 100 employees, and do not currently offer a retirement plan, a SIMPLE (Savings Incentive Match Plan for Employees) IRA may be a perfect fit. Its general low cost and no annual filing requirement make it an attractive option.
  • Automatic enrollment/escalation. To increase participation, many employers are adopting auto enrollment, which would default an eligible employee to contribute a set amount, typically three percent, in a default fund unless the employee actively opts out of participating. Adding an auto escalation feature, where the percentage deferred increases by one percentage point a year, can also help employees save more. Some employers have added auto escalation for all employees as a standalone change, without auto enrollment, which helps everyone save more.
  • Mandatory choosing. An alternative to auto enrollment is to require all employees to make an active decision about plan participation. When an eligible employee is first hired, requiring him or her to check a “yes” or “no” box in order to be paid forces immediate action, instead of allowing the paperwork to be filled out at some point in the future.
  • Target funds. With 401(k) plans, the responsibility for managing the investments falls on the employee. Along with increased education, one way to help employees make better decisions is to add target-date or target-risk funds. These funds change investment allocations based on an employee’s age or risk preference.
  • Enhanced match. In the wake of the 2008 recession, many employers reduced or eliminated their matching contributions. Now employers are increasing and stretching out their matching contributions to sweeten their benefits package and drive up participation. It is important for employers to educate their workers on how the match contributions work to ensure they are taking full advantage of their opportunity to receive these benefits.
  • Expand eligibility. Many plans currently exclude part-time employees, mainly due to the notion that including this demographic would be too costly. But with the advances in automation and technology, the administrative costs to include part-time employees may be lower than you think.

What is your company doing to modify its benefits, attract and retain top talent, and nudge employees to save for retirement? Start a conversation with your employees and ask what they value most. iBi

Kyle Rose is a principal in CliftonLarsonAllen’s employee benefits practice. He can be reached at (309) 495-8716 or The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP to the reader. For more information, visit