From the course: Helping Your Employees Meet Retirement Goals

How do you measure success?

From the course: Helping Your Employees Meet Retirement Goals

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How do you measure success?

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- So how do you measure the success of a retirement program? First of all, you want to count the number of employees participating in your plan. But unless it's mandated by law in your country, don't expect to see 100% participation. Many people need to straighten up their finances before they have the money to put towards retirement. This is especially true for younger employees. Research the participation rates in your country, and benchmark against that. Next, see if your participants are contributing as much as they can to the plans. Again, don't aim for everyone to maximize their contributions. Instead, make sure all plan enrollees are making some sort of contribution. As a benchmark, average US contribution rates are 6.2% of gross income, while in Australia, contribution is government mandated at 9%, and is set to rise to 12% by 2020. Now, the third measure is whether or not employees are actually investing the funds that have been put into the plan, or are they holding cash. Sometimes it's hard for employees to decide how to invest, because they don't understand their choices. In the US, the average retirement plan has more than 20 different investment choices. And when it's too difficult to make a choice, many people leave contributions uninvested. This is where supporting programs and one-to-one professional advice can help. Your goal should be to have 100% of your contributors putting their contributions into investments. If you're not close to 100%, you need to boost your support programs. Finally, over time as employees earn more, they should be increasing how much they contribute. It helps if you can revisit contribution rates with all employees at least once per year. And if the dollar value of overall contributions increase year on year, you're doing a good job. Financial education programs can be a terrific way of boosting the effectiveness of your overall plan. Just make sure the program addresses each of these measurements directly. A program that gets people financially stable enough to participate in the plan will look very different from one that teaches employees how to invest their money. So make sure you measure the effectiveness of your plans, because when your plan is successful, your employees are too.

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