How to provide retirement education to your participants without breaking the bank.
It's important for plan sponsors and participants to be educated about their retirement plans. However, some employers fear that taking the time to provide this education can be too costly.
This is a misconception!
Check out the following examples! The examples relate to a company we will call "ABC".
EXAMPLE 1: ABC Company with fifty employees holds mandatory two-hour retirement plan meetings during the workday. ABC employees earn $18.00 per hour with taxes and benefits being another $3.60 per hour. The direct cost per hour per employee is $21.60. If every employee attends the two-hour meetings, then the cost is $2,160.00
(50 employees x 21.60 rate x 2 hours)
This cost analysis is incomplete. It ignores the allocation of non-employee overhead that could double the answer in this example to $4,320.00
THIS IS ALSO WRONG
Businesses are not operated to cover costs, businesses operate for profit. If the above costs account for 75% of sales, then the sales value of lost production during the meeting is $5,760.00.
THIS IS NEARER TO THE CORRECT ANSWER!
The employer's cost is $115.20 per employee, or $57.60 for every one hour of employee meeting. The employees receive little substantive education.
EXAMPLE 2: ABC Company encourages and promotes all fifty employees to attend
one two-hour class each year. The cost per employee is $40.00. If all fifty employees attend, then the total cost is $2,000.00
EXAMPLE 3: ABC Company provides ongoing and consistent education for its fifty employees: a private class is offered at a time and location selected by ABC company two times per year. Assume that seventy-five percent (or thirty-eight employees) attend the private class. The remaining twelve employees attend one of the public monthly, or quarterly, meetings offered. ABC company pays $1,000.00 for the two private classes, and $40 each for the twelve employees attending the public classes. The total cost to ABC company is $1,480.00
EXAMPLE 4: Review the employer in example 1. Imagine the employer changes its policy and begins offering Voluntary after work retirement financial education! In addition, the employer directs that all the cost of all such education be paid for out of the retirement plan assets.
In this scenario, THE EMPLOYER'S COST OF EDUCATION HAS DROPPED FROM $5,760 to ZERO!