In today’s competitive job market, salary isn’t the only thing top talent is evaluating — benefits play a major role, and retirement plans are high on that list. A well-structured retirement plan can set your company apart from competitors and become a powerful tool for attracting and retaining quality employees. The million-dollar question is: How do you create one that aligns with what employees actually want, without overcomplicating things for your HR or finance team?

The landscape of employee expectations has shifted dramatically over the past decade. Younger workers, in particular, are acutely aware that they’ll need to take primary responsibility for their retirement security, and they’re looking for employers who will genuinely support that goal. Meanwhile, experienced workers are evaluating whether a potential employer’s retirement benefits will help them catch up on savings or provide the flexibility they need as they approach retirement

Creating an attractive retirement plan isn’t just about checking a box or meeting minimum legal requirements. It’s about designing a benefit that employees perceive as valuable, that they’ll use effectively, and that supports your broader goals for recruitment, retention, and employee satisfaction. The good news is that what employees want from retirement plans aligns well with what makes business sense for most employers.

Here’s what you need to do:

1. Work With the Right Professionals

Creating an effective retirement plan requires expertise in a variety of areas. This isn’t some DIY project you can do on a weekend while watching football in the background. You need a financial professional who specializes in employer benefits to help you create employee benefits packages and retirement solutions that benefit both the company and the employee

These professionals can help you benchmark your plan against industry standards and design features that align with your workforce demographics and company culture. They can also provide ongoing support for employee education and help you evaluate plan performance over time. Don’t miss this!

2. Offer Competitive Employer Matching

The employer match is often the first thing potential employees look at when evaluating a retirement plan, and for good reason – it represents free money that can significantly boost their retirement savings. A generous matching formula signals that you’re invested in their long-term financial wellbeing and can be the deciding factor between your company and a competitor offering similar salaries

One common matching formula is 50 cents for every dollar the employee contributes, up to 6 percent of their salary, which provides a 3 percent employer match for employees who contribute at least 6 percent. However, many companies are moving toward more generous formulas, such as dollar-for-dollar matching up to 3 percent or 4 percent, or even matches that exceed the employee’s contribution level.

Consider implementing an automatic escalation feature that gradually increases employee contribution rates over time, paired with corresponding increases in your match. This helps employees save more without requiring them to make active decisions each year, while your increased matching investment pays dividends in employee satisfaction and retention.

3. Implement Immediate or Short Vesting Schedules

Vesting schedules determine when employees gain full ownership of employer contributions, and shorter vesting periods are increasingly important to today’s mobile workforce. While longer vesting schedules were once used primarily as retention tools, they can now backfire by making your plan less attractive to potential hires who don’t expect to stay with any single employer for many years.

Immediate vesting – where employees own 100 percent of employer contributions as soon as they’re made – is becoming more common and is highly valued by employees. If immediate vesting isn’t feasible for your organization, consider a short graded vesting schedule, such as 20 percent per year over five years, rather than cliff vesting that requires employees to stay several years before gaining any ownership.

4. Provide Low-Cost, High-Quality Investment Options

Investment fees can really impact employees’ retirement outcomes over time, and today’s employees are increasingly fee-conscious. Offering a menu of low-cost, diversified investment options demonstrates that you’re prioritizing their financial success over revenue-sharing arrangements that might benefit the company or plan provider.

Focus on providing a streamlined selection of high-quality options rather than an overwhelming array of choices. Most employees do well with 15-20 carefully selected investment options that cover different asset classes and risk levels. Include target-date funds as a default option for employees who don’t want to make active investment decisions.

5. Offer Comprehensive Financial Education

Even the best retirement plan won’t help employees if they don’t understand how to use it effectively. Comprehensive financial education that goes beyond basic plan features can significantly increase participation rates and contribution levels while improving overall employee financial wellness. Provide education at multiple touchpoints – during onboarding, at annual enrollment periods, and through ongoing workshops or online resources. In these meetings, cover topics like the importance of starting early, the power of compound growth, how to determine appropriate contribution levels, basic investment principles, etc.

6. Consider Additional Plan Features That Add Value

Beyond the basics, certain plan features can make your retirement plan stand out and provide additional value to employees. Loan provisions allow employees to borrow from their accounts for major expenses, though these should be designed carefully to avoid undermining retirement savings goals.

In-service withdrawal options for employees over age 59½ can provide valuable flexibility for older workers who want to manage their retirement assets more actively. And then you have Roth 401(k) options, which appeal to younger employees who expect to be in higher tax brackets during retirement.

Adding it All Up

At the end of the day, your retirement plan and benefits are an investment in your employees’ future…and your company’s success. By strategically optimizing for the right benefits, you can create a package that makes everyone happy.