Employee engagement can be greatly improved through offering retirement plans to your staff. But managing and administering such plans can be extremely complex; they involve multiple steps and procedures involving depositing contributions and filing required reports with the government. It may be impossible for small business owners to handle all these administrative duties themselves; here is where professional employee outsourcing (PEO) comes into play.
Professional Employer Organizations, or PEOs, offer retirement plans as part of the benefits packages for their client companies’ employees. This enables small businesses to compete against larger organizations trying to woo away talent by offering greater employee perks. PEOs act as fiduciaries of these plans – overseeing daily operations and compliance in an effort to reduce risks while freeing up more time for core business activities.
PEO retirement plans offer not only lower risk and costs savings for both employers and employees. PEOs use their collective buying power to secure lower fees and investment rates for all clients in their plan; this is particularly significant as the Department of Labor recently passed a rule significantly increasing fee disclosure requirements for retirement plans.
One advantage of using a PEO retirement plan is that the company handles all aspects of administration and documentation for the 401(k). This includes depositing contributions, filing annual reports, coordinating with service providers, employee education programs, user-friendly online experiences for plan access as well as employee services support.
By relieving some administrative strain and sharing fiduciary duties, PEOs make it easier for smaller companies to affordably provide retirement plans to their employees, and attract and retain top talent that might otherwise gravitate toward larger, competitor firms’ offerings.
As any business owner knows, doing their due diligence when selecting a PEO is vitally important. There are various aspects to keep in mind, such as pricing and savings potential for each service offered, expertise provided and flexibility provided. It is also crucial that business owners understand how the PEO will manage its retirement plan (such as handling investment management expenses for each participant in a pooled savings plan) since having one with professional administration at an efficient cost is an invaluable asset to any organization.