How Can You Help Your Employees Achieve Financial Security (Without Offering A Pension)?

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If you're like many business owners, you're constantly looking for ways to attract the best new talent as employees without putting your bottom line at risk. With the administrative and logistical burdens placed on many employers by federal laws like the Affordable Care Act (ACA), Family Medical Leave Act (FMLA), and other regulations, you may not feel you have the leeway to offer any long-term retirement options like a pension. What other benefits can you provide to your employees to encourage them to remain with your company for the long haul? Read on to learn more about some lucrative (but less well-known) retirement and group benefit options.

What retirement options can you offer to employees without committing to a pension plan?

For publicly-traded companies, offering an employee stock purchase plan (ESPP) to employees can be a win-win proposition. This program allows employees to purchase shares of your company's stock at below-market value. The employee can hold onto this stock or immediately sell it for a profit (unless you've restricted sale activity as a provision of your plan). In addition to providing employees with a discounted way to invest, this benefit also comes with a built-in incentive for the employee to further your business -- the better the business does (and the more profit it earns), the higher the value of the employee's shares of stock. 

If you're not sure you want to sell shares below market value as part of an ESPP, you may simply wish to award shares of your company's stock to employees as part of an annual bonus or performance review. When included as part of compensation, these shares represent a deductible expense for you, but should instill a bit more loyalty and company pride in your employees than a check (or cash). 

For private companies, a defined contribution (rather than defined benefit) retirement plan may help your employees comfortably save. While a defined benefit plan (or pension) provides employees with a guaranteed weekly or monthly income at retirement (often imposing an administrative and financial burden on the company), a defined contribution plan simply serves as a "match" for retirement contributions. You'll be able to invest these matching funds on your employee's behalf and then surprise him or her with a hefty check at retirement.

What else can you use to attract qualified, loyal employees?

While many employers now offer health care coverage to employees, there are a myriad of other group benefits potentially available. By offering these benefits when competitors aren't, you'll be able to get the upper edge when it comes to recruiting talent. This is especially true when dealing with highly-paid individuals -- while offering the extra salary necessary to "poach" this employee from a competitor could lock you into regular raises (or risk losing your employee), offering deductible benefits won't impose nearly as much of a cost premium for highly-compensated employees.

If you already offer health insurance to employees, check with your carrier to see what additional types of insurance are available. Many insurers will offer group benefit rates on auto insurance, short-term and long-term disability insurance, malpractice insurance, and even homeowners insurance. For employees who have trouble getting (or paying for) this insurance on the private market, like those who have a past DUI conviction or who have medical conditions that render them ineligible for long-term disability coverage, this benefit can be invaluable. Instead of being quoted an individual rate, these employees are placed into a risk "pool," ensuring that their premiums aren't significantly higher than anyone else covered under the plan.

Depending upon the solvency of your business and the competition for qualified job-seekers in your area, you may simply want to make this benefit available to interested employees, permitting them to pay for coverage via payroll deduction. However, if you're in an industry where finding loyal employees is difficult, subsidizing a portion of this coverage (or giving employees a lump sum bonus during open enrollment to allow them to pay for their selection) may be your most cost-effective option. For more information about different group benefit plans you might use, visit websites like