Look for Employers Who Help You Save for Retirement
Posted by Michelle V. Rafter
on February 14 2014
By Michelle V. Rafter
When it comes to saving for retirement, some outside assistance can go a long way. For that reason, if you’re looking for work, it could pay -- literally -- to consider the type of retirement savings plan offered by any potential employer you’re investigating.
The most common retirement savings vehicles that companies offer are a defined contribution plans and defined benefit (DB) pension plans. Of all of them, the most popular is the 401(k), an individual account into which an employee can defer a specified portion of their annual salary tax-free to invest as they wish until they retire. Some companies match 401(k) contributions, kicking in 25, 50 or 100 cents on the dollar up to a certain permissible percent of employees’ salary.
401(k) Retirement Savings Plans
401(k) have become important tools for job seekers looking for employers who will help them feather their retirement nests, as fewer companies today offer traditional pension plans.
Of the 2014 Best Companies to Work For, 99 offer a 401(k) or its close cousin, the 403(b) plan. Of those companies, 88 provide some type of company match, and 41 percent contribute to employees’ 401(k) plans whether or not employees invest their own funds.
Here’s a sample of some of the 401(k) plans offered by 2014 Best Companies:
CHG Healthcare Services - Employees are eligible to enroll in the Salt Lake City health-care staffing agency’s 401(k) retirement savings plan as soon as they're hired. The 1,599-person company matches 50 percent of employees' contributions, up to 5 percent of their annual pay. Employees can get one-on-one retirement savings counseling sessions.
Baker Donelson - The Memphis-based law firm matches 100 percent of most employees’ contributions to their 401(k) plans up to 3 percent of their annual compensation. In addition, employees at the 1,247-person firm also receive bonuses when it does well financially, and at other times, such as holidays.
W.L. Gore & Associates, Inc. - The Gore-Tex fabrics maker contributes 3 percent of employees’ annual pay to their 401(k) accounts whether or not workers make their own contributions. In addition, Gore employees can become company shareholders through the company’s associate stock ownership plan after a year on the job, accumulating the equivalent of 12 percent of their base pay annually. “The stock ownership program and the contribution funded by the company towards it are fantastic,” one employee says. “Fifteen percent of my gross salary is provided by the company towards my 401(k) and company stock purchase.”
In the past three decades as 401(k) plans have come into their own, the number of companies offering employees defined benefit pension plans has dropped dramatically. In defined benefit (DB) pension plans, companies promise to pay their retirees a certain amount a month. Pensions can be paid out at a set rate or based on formulas that take into account what a person’s job, salary and years of service were before they retired, according to the U.S. Labor Department.
In 2011, 69 percent of private sector workers in some type of employer-based retirement savings plan had a 401(k) and only 7 percent had a DB pension plan, according to the latest data from the Employee Benefits Research Institute.
Of this year’s 100 Best Companies, 27 offer employees a DB pension plan. Here’s a snapshot of a few:
Navy Federal Credit Union - The Vienna, Virginia, financial institution offers 9,735 employees both a DB pension plan, and a 401(k) savings plan with a 100 percent match of up to 6 percent of an employees’ annual pay. To help employees manage their investments, the credit union offers free financial counseling, including budget counseling and a debt management program. Navy Federal hosts an annual financial expo and runs an online game that shows employees what they need to retire and how much they need to save to get it, and connects that with information on their pension and 401(k) plans. “Benefits like medical and retirement are great,” one Navy Federal employee says.
Deloitte - Employees at this Big Four accounting firm are enrolled in a defined benefits pension plan after their first year of work, with company contributions based on a percentage of their annual salary. Deloitte also offers a 401(k) retirement plan, matching 25 cents on the dollar of the first 6 percent of an annual compensation an employee saves to their account. Starting in 2013, new employees immediately received company 401(k) matches, unlike in the past when they had to work for a year before qualifying.
Mars - The candy company makes saving for retirement sweet for employees, offering both a DB pension plan and 401(k). Mars deposits 6 percent of an employee’s annual salary into a pension account each pay period, with the money earning interest based on consumer price index plus 3 percent. When an employee retires, they collect a monthly annuity from the fund. Mars employees also can contribute up to 75 percent of their salary toward their 401(k) retirement savings plan, the IRS limit. Mars matches up to 6 percent of workers’ contributions even if they don’t contribute themselves.
Read more: Ultimate guide to retirement: 401(k)s and company plans, from Money magazine
GreatRated contributor Michelle V. Rafter is a freelance journalist covering job hunting and workplace issues. Find her online at @MichelleRafter or www.michellerafter.com, or contact her at