Should Your Organization Offer Retirement Benefits?

Competing for top-tier talent is getting more challenging every day—and more expensive. It’s basic economics: as the supply of labor remains fairly constant and the demand increases, the cost rises. Retirement benefits may be seen as cost-prohibitive, or simply unnecessary, for companies that are trying to watch their bottom lines.

The Bureau of Labor Statistics reports that 69 percent of all workers have access to retirement benefits, and that access is strongly correlated to company size. Only 53 percent of people who work at a company with 1-99 employees have access to retirement benefits. This increases to 81 percent for those who work in companies with 100-499 employees, and 91 percent for those work in companies with more than 500 employees.

Why you should offer retirement benefits

Offering retirement benefits can be particularly useful for small companies who struggle to compete against larger companies to attract and retain talent. Here are a few reasons why:

    • Seventy five percent of people expect their employer to offer 401k or other pension programs. This comes just after medical benefits (81 percent), and ties with dental benefits, as the most expected employee benefit. Employers who don’t offer retirement benefits may be missing out on great candidates.
    • Sixty percent of people would take a job with lower pay but better benefits. You don’t have to match salaries dollar-for-dollar with other companies if you have a competitive compensation package overall. The right mix of employee benefits and creative perks may actually increase your bottom line.
  • Thirty seven percent of candidates have declined a job offer because compensation and benefits were not in line with their expectations. Your job offer is your final chance to sell your opportunity to your candidate. Use it to show your candidate how much you value them. A weak package can make an otherwise engaged candidate lose interest very quickly, particularly if they’ve received a stronger offer elsewhere.
  • Sixteen percent have left a job or turned down a job in the last 12 months due to the benefits offered. Your benefits package makes an impact on your ability to close and retain talent. Top performers are likely being recruited by other companies, and offering a less competitive package can cost you.
  • Forty two percent of people say improving their benefits package is one thing their employers could do to keep them in their jobs. It is the second most mentioned after an increase in salary, but mentioned more than a promotion. If retirement benefits are not currently included in your compensation package, it’s certainly an option worth considering. If you do offer retirement benefits, there may be ways to make them more appealing.

How to make your retirement benefits more competitive

If you’re currently offering retirement benefits, there may still be some ways to make them more competitive, and more appealing to candidates:

  1. Offer an employer match (or a better employer match). Many companies will match their employee’s contributions 50 percent, or dollar-for dollar. A higher match percentage shows candidates that they’re valued, and makes it less likely that they will receive a more competitive offer elsewhere. 
  • Offer a higher cap. An employer match often comes with a cap. For instance, an employee making 100,000 may get a 100 percent match for up to 5 percent of their salary, which would amount to a maximum of $5000 per year. These companies could potentially increase their cap to a higher percentage of the employee’s salary, or remove the cap altogether.
  • Reconsider vesting. Some companies will only participate in employer matching after the employee has been with the company for a predetermined amount of time—usually one year. However, this can make your retirement program less appealing to candidates who have employer matching at their current role. Remember, your offer isn’t just competing with other offers, it’s often also competing against your candidate’s current role.
  • Provide more options. Provide options that appeal to different candidates, including pre-tax and post-tax features and different investment options. Some people would prefer the option to control more of their investments.
  1. Offer training. Particularly if you offer more options, provide training to increase participation in your program and reduce confusion. Ask your plan provider to come to your office, or present a webinar, to discuss the benefits and process of enrolling in a plan. Record this session, and make it part of your onboarding for new employees. This ensures that your employees are getting the full value from your retirement benefits.


There is a lot of competition for talent, and retirement benefits can help you create a stronger compensation package that attracts and retains top performers. Ultimately, the decision on whether your organization should offer retirement benefits—and how to structure them—is up to you. But remember: the majority of candidates expect retirement benefits, and the majority of companies offer them. If you forego this basic benefit, candidates who want retirement benefits can easily find them elsewhere.