Your total compensation plan must serve to attract, retain and motivate your employees. While salaries will be the largest component, other parts of the plan are also important. For example, you may want to include retirement benefits, medical insurance, savings programs and vacation. Together with the work environment, your benefit program could be the difference between having an effective, steady workforce or a group of unsatisfied employees you are constantly replacing.
Creating a program doesn’t have to be difficult or expensive. It is common for businesses to create programs with flexibility to allow employees to choose what is important to them and for employees to share in the total cost. We’ve outlined a few options for you to consider adding to your employee benefit program.
The right retirement plan should take into account the needs of the business as well as employees concerns. Costs and ease of administration must also be carefully evaluated. Below are brief descriptions of different retirement plan options. Be sure to investigate them thoroughly before deciding which one is right for your business:
- SEP-IRA – These plans are ideal for small organizations or self-employed individuals. They are easy to establish and have no special governmental filing requirements. Only the employer makes contributions, and the limit is up to 25% of compensation, up to $52,000 for 2014.
- SIMPLE-IRA – These plans are for companies with up to 100 employees and allow for employees to defer wages into the plan and for the company to also make contribution. Employees can defer up to 100% of their wages with a limit of $12,000 for 2014; and up to $14,500 if age 50 or over. The employer can elect a matching feature or a simple percentage of wages contribution. There is some administration needed for this option.
- 401(k) Plans – These plans have become popular because of their flexibility and the higher limits for employee and employer contributions. With a 401(k) plan, there can be significant administration needed and annual filings are required.
Employee benefit consulting firms, trust departments or some investment firms usually have the expertise to help you evaluate your options. However, be sure to understand all the costs for administration and investing the funds.
If your company has many employees, a group medical plan may be a key component to your benefits package. You will want to consider your plan carefully, shop for the best plan and perhaps use a health insurance consultant. Your cost will be based on the size and make-up of your group. It will also change based on actual results. You may want to consider sharing the cost with your employees and providing different options for them to choose.
Many employees are interested in accumulating funds but have a difficult time actually saving money on a month-to-month basis. By adding a savings program to your benefits package, you may be able to help them without any cost. Most payroll services offer employees the ability to direct a portion of their wages into an account at their financial institution. Be sure your employees are aware of this option and of direct deposit. These conveniences make it easier for employees to handle their finances and the company may save some of the costs of payroll processing.
South State offers our exclusive South State at Work program to provide financial benefits to employees of partnering businesses that includes discounts on products and services. In addition, employees have access to the advice and expertise of local bankers. To learn more about our South State at Work program, click here.
Disability and supplemental life insurance
Many insurance companies offer relatively inexpensive plans that can be established so the employees share in the cost.
Flexible spending accounts
This type of program is relatively new and offers some tax advantages1 for the employees with little or no additional costs for the employer. Employees direct a portion of their wages into the accounts to provide for the reimbursement of dependent care or unreimbursed medical costs. These are “use it or lose it” arrangements. Employees decide how much to defer for each type of expense and that decision is irrevocable. Many insurance companies offer these types of arrangements and some will handle all the paperwork.
Education reimbursement programs
Many employees are interested in furthering their education. If your business requires ongoing training in certain fields, it may be wise to provide partial or total reimbursement for certain types of classes.
Vacation and days-off policies
Employees need time off occasionally for personal use or just for rest and relaxation. Having a policy that employees understand and one that provides flexibility will be greatly appreciated.