As 401(k) plans grow, so do administrative fees, compliance needs, and operational work. Each new participant adds to these demands.
With the right approaches and tools, organizations can scale their retirement benefits and keep costs in check.
The Cost Reality With Retirement Benefits
Retirement benefits significantly boost employee satisfaction and support long-term financial well-being, with employers typically investing an average of 4.6% of payroll in these plans. However, growing and managing these programs presents unique challenges for medium and large organizations.
Larger companies often dedicate 15% to 40% of their payroll to benefits, including retirement plans. As participation grows, the costs of managing contributions, handling administrative tasks, and maintaining compliance increase proportionally. Balancing these expenses with other operational needs is crucial.
According to the U.S. Bureau of Labor Statistics, organizations in private industry spend approximately $1.00 per hour on defined benefit plans and around $0.80 per hour on defined contribution plans. For organizations with 1,000+ participants, these costs add up quickly. A recent Willis Towers Watson survey found that 67% of organizations rank benefit costs as their top concern when expanding retirement programs.
Better Asset Management Makes a Difference
Strategic asset management cuts costs at scale. When retirement plans run well, organizations reduce fees, improve returns, and avoid unnecessary expenses. This makes existing resources work harder.
Regular fee analysis, strategic provider negotiations, and data-backed investment choices lead to savings. Automated tools that track and report on assets cut down on administrative work. Well-run asset management adds value without adding costs.
5 Ways to Scale Benefits Without Adding Costs
Growing retirement programs in large organizations require strategic action. Here are proven ways to expand benefits while controlling costs:
1. Put Automation to Work
Technology cuts manual tasks in retirement plan management. Automated systems simultaneously handle enrollment, compliance reports, and contribution tracking for thousands of participants, reducing operational costs and mistakes.
2. Pick Plans Built for Growth
Some plans grow more effectively than others. 401(k) plans with employer matching offer controlled expansion, providing a clear path for growth while maximizing benefits for both employers and employees. These plans strike the right balance between cost-effectiveness and participant satisfaction as you grow.
3. Make Plan Management Easier
Managing a large retirement program doesn’t have to be complicated. Simplifying tasks like tracking contributions, ensuring compliance, and keeping participants informed can save time and reduce costs. Using tools that help automate these tasks allows your organization to handle growth more easily without adding extra resources.
4. Stay on Top of Fees
Plan fees hit large organizations hard. Regular reviews and provider negotiations help save more when multiplied across many participants. Small fee cuts add up to major benefits at scale. Healthier plans give you greater negotiating power for lower fees. With Manifest, more participants transfer and consolidate accounts, empowering you to maintain a cost-effective retirement plan. One of our employers saved $108,000 within one year.
5. Support Participant Financial Learning
Well-informed participants make better choices. Financial education helps participants pick suitable investments and manage their accounts well. This cuts organizational risk and improves plan results.
Using Data to Improve Plan Results
Large-scale retirement benefits create valuable insights. Participation rates, investment patterns, and account moves show ways to boost engagement and cut costs. Here's how:
1. Study Participant Actions
Data reveals how participants use their plans and where improvements help. Low participation in certain groups points to needed changes or education without adding costs. In just 12 months with Manifest, our partners have increased contributions by:
- 3.3x among younger employees
- 2.5x for lower-income workers
- 41%+ for women
- 32% for minorities
2. Regularly Review Provider Performance
Consistently assessing your retirement plan providers helps identify opportunities for cost savings and service improvements. By comparing fees and services with industry standards, you can ensure your plan remains competitive and effective.
3. Track Key Numbers
Important measures like participation rates and contribution rates show what works. Tools like Manifest provide insights for better decision-making.
Growing with Technology
Tech solutions help organizations expand retirement benefits cost-effectively. Manifest’s platform allows participants to consolidate their accounts in minutes, removing burdensome administrative work for plan sponsors.
According to Meenakshi Lakshmanan, co-founder and CTO of Manifest, participants who combine accounts add an average of $13,000 to their savings over time. Organizations benefit from fewer inactive accounts and more engaged participants.
What Works in Practice
Growing retirement benefits requires both clear goals and practical steps. Leading organizations use the following methods:
Technology Use
New platforms cut the manual work. Automated systems handle daily tasks like enrollment and contribution tracking, freeing up time for important work. Automation cuts operational costs by 30% on average.
Risk Planning
Smart risk reviews protect participants and organizations. Regular checks catch issues before they affect costs. Finding and fixing problems early prevents expensive corrections later.
Working with Providers
Good provider relationships lead to better terms and support. Regular meetings keep services matched to needs. These talks often find ways to save through combined services or volume pricing.
Measuring Progress
Clear numbers show progress in cost-effective growth. Key measures include:
- Cost per participant
- Time for manual work
- Participation by group
- Participant satisfaction
These measures guide improvements and show what needs attention.
Creating Lasting Value
When organizations grow retirement benefits well, the benefits go beyond saving money. Well-built programs create value through:
- More participation
- Higher retention
- Better reputation
These gains grow over time, supporting steady growth. Studies show good plans boost retention and increase workforce engagement.
Next Steps
Organizations ready to scale retirement benefits cost-effectively can begin here:
- Review current costs and work
- Find automation options
- Check provider agreements
- Understand participant needs
- Set up measurement tools
Each step builds better operations and participant results.
Moving Forward
Growing retirement benefits without raising costs takes careful planning and the right tools. Success comes from a mix of strategic thinking and practical solutions.
The future of retirement benefits depends on building cost-effective, modern programs that make savings more accessible for participants. By investing in innovative tools, plan sponsors can maximize retirement outcomes for everyone.
