News & Information

LABOR & EMPLOYMENT LAW — 10/7/08

Managing employees' 401(k) concerns in face of Wall Street turbulence

Another day of financial woes on Wall Street leads to more employee concerns about the stability of their retirement plans, according to Capital Associated Industries, Inc (CAI), the largest employers' association in North Carolina. How can employers help employees maintain confidence in their company and assurance with their benefits plan?

Lynn Unsworth, CAI regional manager, shares a few tips for employers on how to handle this difficult human resources situation that can have a big impact on employee morale:

1. Don't give financial advice. Employers can give employees the resources they need to make decisions, but advises against giving employees advice on selecting stocks and where they should invest their money.

2. Educate employees on their options. Unsworth recommends companies talk with their employees on restrictions and penalties if they want to withdraw money from their 401(k). Employees need to be educated on the mechanics of their plan.

3. Bring in investment advisors. Companies should enlist their plan vendor to work with employees on their individual investment strategies. Employers need to make sure their employees are engaged in a conversation with financial and investment advisors about their 401(k).

4. Urge a long-range perspective. Employers need to reinforce to employees that a 401(k) is a long-term investment and help them understand they are investing for retirement.

5. Release benefits statements. Employees often underestimate the value in their hidden paycheck. Unsworth recommends employers share with their employees all the benefits they offer to help them learn the value of their paycheck and what vacation and holidays are worth.

6. Reassure employees of safeguards. Make sure employees know their 401(k) is audited and heavily regulated by the Department of Labor and the IRS. Employees need to be reassured the money they are investing is segregated from the company's general operating funds.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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