Stay competitive, compliant, and cost-effective

Providing competitive benefits is key to building a strong, successful team. Benchmarking is an important tool because it helps you get the data and insights needed to make smart decisions for your benefit plans. It’s also important for meeting rules, avoiding legal trouble, keeping up with industry standards, and supporting your employees.

Here’s why benchmarking should be a priority for your company and how you can use it to improve your plans.

What is ERISA and why it matters

The Employee Retirement Income Security Act (ERISA) sets rules for how employee benefits—like retirement plans—are managed. This law requires employers act in the best interests of their employees. Not following ERISA rules can lead to serious legal and financial problems.

ERISA covers both health and retirement plans, so leaders need to manage both types of benefits responsibly. Reviewing plans regularly, getting outside advice, and taking action can help reduce risks, cut costs, and protect employees and your company.

Why benchmarking is important

Benchmarking is the process of comparing your benefits against other companies to see how you measure up.

1. Stay competitive: Benchmarking helps you keep your benefits in line with what other companies offer, so you can attract and keep top workers.
2. Save money: Studies show that reviewing retirement and health plans can uncover ways to cut costs, like lowering fees or improving plan designs.
3. Make employees happy: Employees who see real value in their benefits are more loyal and engaged.

What to look at when benchmarking

To get the most out of benchmarking, you need to look at the right things:

• Check contribution rates, fees, and how investments are performing.
• Fixing high fees or replacing poorly performing funds can save money while improving quality.

Keeping plans fair and competitive

Your employee benefits say a lot about your company’s values. Benchmarking helps you balance what employees need with what the company can afford. It leads to better hiring, lower turnover, and a more engaged workforce.

Following your fiduciary duties

ERISA requires employers to act in the best interest of their employees. This means reviewing benefits regularly to catch high costs, outdated options, or other problems. Benchmarking shows you’re serious about following the rules and supporting your employees.

Steps to get started:

1. Get expert help: Work with professionals who know how to benchmark benefits.
2. Compare plans: Use reports to see how your benefits stack up against others.
3. Review regularly: Make benchmarking an annual part of your process.
4. Ask for feedback: Talk to employees about what they like and don’t like about their benefits.
5. Review options: Look for ways to save money without lowering the quality of benefits.
6. Set up a committee: Create a team that meets regularly, takes notes, and makes decisions based on findings.

Competitive, compliant, and cost-effective employee benefit plans don’t happen by accident: they require thoughtful review and updates. We specialize in helping leaders like you benchmark and optimize 401(k) plans for better outcomes. Let us help you create a retirement plan that works for your employees and your business.