Plan Design

This section provides ideas and examples of changes you can make to increase participation. The most appropriate changes for your company will depend on your current program, current participation levels and workforce characteristics.

Direct Deposit

Encourage all employees to participate in direct deposit and offer a payroll card to those who choose not to get a bank account.

Ideally the payroll card would include the following features:

  • Allows several no-fee withdrawals per month at conveniently located ATMs.
  • Functions as a debit card.
  • Provides immediate funding or flexible funding, which gives employee immediate payday access to wages.
  • Gives employees 100 percent of their net pay.
  • Does not require established credit.
  • Meets compliance requirements in all states where employees live.

Establish a relationship with a bank(s) and/or credit union(s) and encourage them to offer as many of the following products and services as possible to your employees:

  • No fee, no minimum balance checking accounts.
  • Payroll cards as alternatives for those who prefer to not use a bank account (allow multiple withdrawals per month at no fee).
  • Simple fee structure and clear explanation of fees in applicable languages.
  • No interest checking accounts if requested for religious reasons.
  • Access to banking services for poor credit risk employees (who otherwise would not have access) especially after completing approved financial education course.
  • Access to low-cost money orders for making long-distance payments.
  • Deposit accounts designed to help people accumulate savings.
  • Deposit-secured loans to individuals with no credit or poor credit
    Note: Recent immigrants often have not yet had an opportunity to develop a credit record.
  • Budget management and credit repair seminars.
  • Fee-based check cashing for those who do not have an account.
  • Culturally diverse and bilingual staff, reflecting your workforce.
  • Onsite banking services (ATMs or small branch offices) and/or locations near employee homes.
  • Extended hours, including evenings and weekends.

Retirement Savings

Modify employer-sponsored retirement savings plans to increase participation; depending on your current program, participation levels and employee characteristics, consider implementing the following:

  • Automatic enrollment with an opt-out option
  • Immediate eligibility (no tenure or age restrictions)
  • Employer matching
    • Average: 50 percent up to 6 percent of salary
    • Excellent: 100 percent up to 6 percent of salary
  • Automatic investment balancing to simplify investment decisions
    • Age-based investment options: Time-based Lifestyle Funds: distribution of risk based on expected retirement age
    • Investment auto-rebalancing: Quarterly or annual auto-rebalancing based on desired percentages of different investments/funds
    • Risk-based auto-balancing: Pre-defined investment diversification based on employee’s desired risk level
  • Automatic escalation (a default rate of contribution increases) and allow employees to opt-out or modify
  • Employee determined contribution increases with pay increases. Ask employees to indicate what percentage of their annual increase, raise or bonus they want to direct to their 401(k).
  • Allow employees to transfer funds between investments and change contribution amounts at multiple times throughout the year.
  • No vesting requirement for employer matching dollars. If this is not feasible, determine the optimal vesting schedule based on analysis of employee turnover.

Financial Literacy and Education

Identify and facilitate access to quality, culturally competent financial education resources at minimal or no cost to employee.

  • Seek support from a financial services provider or a local nonprofit.
  • Offer services in native languages, as needed.
  • Host onsite classroom training.
  • Provide links to computer-based programs and computer access.
  • Provide hard copy training materials.
  • Allow employees a specified amount of on-the-clock time to obtain training.
Provide referrals to community-based programs.
  • Allow nonprofits to use company space to provide free financial services to employees (tax assistance, pro bono financial planning services, etc.).
  • Educate employees about the benefits of tax credits of all kinds. (Most common are the federal credit - Earned Income Tax Credit or EITC and the Working Family Credit for Minnesota. Many other credits are available. Tax preparers can assist with determining eligibility.)
  • Negotiate special rates or subsidize fees to community-based financial education sessions.
  • Promote your Employee Assistance Program as a confidential source for help with financial crises. Make sure that your EAP provider has strong capabilities in this area and can refer to qualified credit counselors.