Pub. 1 2010 Issue 1

www.wvbankers.org 10 R etirement plans represent a sub- stantial financial investment for employers—likely among the largest investment a bank can make in its people. Maximizing that investment means designing a retirement program Designing the Right Retirement Plan for Your Bank by Mark Hogan, Regional Marketing Director, Pentegra Retirement Services Retirement programs are a critical element in designing total compensation programs for today’s community banks. In a highly competitive employment market, benefits and compensation are critical tools in attracting and recruiting banking professionals. compensation strategy, the different types of plans available, an analysis of what your peers offer, and consider- ations such as demographics and the maturity of your institution. Successful plan design also means different things to different types of institutions. Stock institutions will typically integrate company stock with retirement plans. Mutual institutions, without the ability to offer company stock based capital accumulation pro- grams, will generally provide somewhat richer defined benefit and 401(k) plans. In the final analysis, however, all com- munity banks share a similar goal—to attract and retain valuable employees in order to provide a high level of custom- er service and to enhance the growth and profitability of the institution. Designing a retirement program that accomplishes these goals begins with understanding an organization’s busi- ness objectives and how those objectives translate into a benefits philosophy. There are two basic approaches that a company should consider in developing a benefits philosophy. The first centers on an “Objective” Ap- proach—that compensation and benefits are offered in order to fulfill a specific function, (i.e., to provide employees with sufficient retirement benefits). The adequacy of the benefits involves an analysis of what level of compensation and benefits allow an employee to main- tain a certain standard of living. The other is a “Competitive” ap- proach—that attractive benefits and compensation packages are offered in order to attract and retain employees. Benefit programs should be viewed as an important component of total compensation. Adequacy of total compensation involves an analysis of wages and the level of benefits offered by competitors. It is important to recognize that while these two approaches are different, they that meets your organization’s business as well as benefit objectives. Designing an effective retirement pro- gram for your organization starts with a review of your management philosophy,