Defined Contribution Plan Strategy
Defined contribution puts more of the decision and control of benefit choices in your employee’s hands.
With government health care evolving, healthcare costs outpacing inflation and Millennials accounting for nearly 35 percent of the workforce, a defined contribution approach is a strategy worth discussing with employers of all sizes.
In most cases employers use a defined contribution strategy to give each employee a set amount of money to purchase benefits. The employees and their families can go to an on-line exchange to review their options and make decisions about what is most appropriate to them. The exchange can be privately designed for an employer using group benefits or once the public exchanges are operational, employees can be directed to individual benefits.
Why a defined contribution plan works
Rising healthcare costs and limited options force employers to annually tweak benefits, switch carriers and shift costs to employees. But no one wins.
- Employers’ costs continue to rise
- Employees see cuts to their benefits and higher premium requirements
- Employees don’t fully value their benefits
Defined contribution plans can successfully address these challenges by empowering employees to make meaningful benefit decisions while employers benefit from increased goodwill and the comfort of a fixed budget.
21st Century Benefit Advisors guides employers through the defined contribution concept to fully understand the strategic options, the workplace cultural implications and the administrative logistics.
