With small and mid size business owners expressing optimism about 2021, retirement plan sponsors can jumpstart savings efforts for the long term security of employees.
Small Businesses Lighting the Path
As reported on PR Newswire:
A new sentiment survey of small and medium-sized business (“SMB”) owners describes their outlook for 2021 as optimistic despite the significant impact of COVID-19 on business performance throughout 2020. The report, authored by GGV Capital and Hello Alice, also suggests that business owners expect an uptick in hiring, technology purchases, and overall growth.
Specifically, 83% of the businesses surveyed believe their business will perform better in 2021, with 93% planning to hire.
Optimism in the small business sector makes the close of 2020 a great time for plan sponsors to help employees think about their retirement saving plans for 2021. Keep in mind that most employees don’t have financial advisors and are looking for guidance from their employers to steer out of the stresses of 2020 and into retirement planning.
Plan Sponsors Can Make a Difference
401K Specialist offers these suggestions to inspire more employee saving efforts.
Stretch the match. The employer match is a powerful way to encourage increased saving. Consider this tip: Say you’re currently matching 100% of contributions up to a rate of 3%. Shifting to a 50% match up to a rate of 6% is likely to boost your employees’ savings rates at no additional employer cost.
Expand the “autos.” As in, use auto-enrollment to help overcome the inertia of signing up for the company sponsored plan. Data indicates that automatic prompts for signing up for the retirement plan—and periodically increasing contributions—result in more savings.
Evaluate the impact of fees. When assessing plan offerings, analyze the impact of potentially higher fees on the future security of participating employees. For example: reducing fees by 20 basis points could translate into tens of thousands of dollars over the decades—money that could make the difference between retirement-ready and retirement not-quite-ready.
Don’t Forget the Basics
As you communicate with plan participants, boost their confidence by reminding them that your company’s 401(k) plan is covered with an ERISA fidelity bond. In fact, now is a good time to check that your required ERISA fidelity bond is up to date.
Only companies named on the Department of Treasury’s listing of approved sureties are able to provide ERISA fidelity bonds. Colonial Surety Company is not only U.S. Treasury listed, but also rated “A Excellent” by A.M. Best Company, and, licensed in all 50 states, the District of Columbia and most U.S. Territories. At Colonial, rooting for small businesses always matters—that’s why we offer a simple digital and direct process that allows customers to instantly purchase bonds and insurance online.
Colonial’s comprehensive, service-based solution arms businesses with the ERISA bond required for the 401(k) plan—plus, affordable additional protection, such as Cyber Liability coverage for the plan, and Fiduciary Liability coverage for the plan sponsor.
Good To Know
Small and medium-sized businesses (SMBs) make up 40% of the US GDP! 60% of people in the U.S. work for SMBs. As Managing Partner of GGV Capital, Jeff Richards observes:
The U.S. economy is in the first inning of a massive reboot after the Covid-19 pandemic, and small business owners are leading the way. They are spotting opportunities, starting new companies, and embracing technology as a way to adapt and build enduring businesses.
With small businesses setting their spotlights on the path forward, prepare for growth in retirement savings. Be sure your ERISA Bond coverage is current. Colonial Surety Company even includes retroactive ERISA fidelity bond coverage for past years when the plan was not covered. Colonial makes it easy, direct and instant: Obtain your ERISA Bond here now!