The Challenges of Providing Employee Retirement Plans: A CFO’s Perspective

The Challenges of Providing Employee Retirement Plans: A CFO’s Perspective
September 10, 2025 5 mins

The Challenges of Providing Employee Retirement Plans: A CFO’s Perspective

The Challenges of Providing Employee Retirement Plans: A CFO’s Perspective

CFOs face unpredictable costs and complex regulations when designing retirement plans. Balancing fiscal responsibility with employee needs requires forward-thinking strategies that adapt to evolving business landscapes and workforce expectations.

Key Takeaways
  1. Rising and unpredictable costs make retirement plan management challenging for CFOs.
  2. Complex regulations and administrative burdens increase compliance risks.
  3. Leveraging economies of scale can reduce expenses and streamline plan administration.

Managing corporate finances while ensuring employee satisfaction is no small feat, especially for CFOs in mid-to-large-sized companies. These CFOs and many other professionals need to balance rising costs, complex regulations, and the challenge of employee engagement – all while focusing on growth. 

Challenge #1: Unpredictable Costs

Offering a 401(k) plan involves significant financial obligations. Employer matching contributions, administrative fees, and compliance costs can quickly add up. Expenses must be balanced against tight budgets and strategic growth initiatives.
Rising costs, especially with fluctuating market conditions, further complicate this balancing act. Unexpected market downturns may strain the budget for different options, like matching contributions, leaving less room for other priority investments. CFOs need creative solutions to manage these competing priorities effectively.

Sustainable Strategy: Leverage Economies of Scale

Consider collective plans that allow organizations to offer retirement benefits as part of a larger group. By joining these collective arrangements, participating employers gain access to greater economies of scale. This reduces administrative costs and investment fees, and also enhances the ability to offer robust plan features that might be out of reach for a single company. 

Quote icon

Are you better off being a fiduciary yourself, or are you better off letting somebody else doing it for you, and along the way picking up a host of other benefits?

Ahnaf Bashir
Head of Human Resources, Advance Financial

Challenge #2: Complexity of Regulations and Administration

The intricacies involved in maintaining a compliant retirement plan can feel overwhelming. The Employee Retirement Income Security Act (ERISA) imposes strict rules regarding fiduciary responsibilities to ensure plans meet specific standards. Failure to comply could result in steep penalties or lawsuits, adding another layer of risk.

Managing these plans often means spending countless hours on regulatory paperwork, plan monitoring, and reporting. This administrative workload strains finance and HR teams, reducing their bandwidth for strategic activities. The operational complexities can also increase inefficiencies, leaving CFOs navigating compliance risks while juggling day-to-day operations.

Sustainable Strategy: Find a Streamlined Solution

Organizations can explore a shared retirement plan approach that reduces the burden on individual employers, freeing up finance and HR teams from the time-consuming details of plan oversight and regulatory response and paperwork. By centralizing plan operations, these plans help organizations navigate complex legal requirements more efficiently, allowing internal teams to focus on broader strategic priorities.

Challenge #3: Employee Engagement

Even the best designed retirement plans fail to deliver value if employees don’t use it effectively. Encouraging employees to contribute enough to their 401(k) plans to maximize benefits—like employer-matching contributions—is particularly challenging. Low participation rates not only weaken employees' financial futures but also discredit the value of benefits offered by the company.

The CFO’s role involves not only ensuring that the plan is financially sustainable, but also supporting initiatives that help employees understand and appreciate the plan’s benefits. This strengthens both the company’s financial health and its reputation as an employer of choice.

Sustainable Strategy: Access Better Options for Employees

Pooled employer plans (PEPs) with significant experience and substantial assets under management are uniquely positioned to offer participants access to a curated investment lineup typically reserved for larger institutions. Their scale allows negotiation for better pricing and selection of top-tier investment managers, ensuring a selection of funds designed to achieve competitive, long-term results. For plan participants, this means greater diversification, professional oversight, and access to investment options that improve the likelihood of strong retirement outcomes.

The Cost of Inefficiency

Every hour finance or HR teams spend managing retirement plans is time taken away from strategic priorities like growth initiatives, talent acquisition, and retention. Inefficient plan administration drains resources from departments that could be focusing on higher-impact efforts.

700k+

The number of separate 401(k) plans in the U.S.

Source: 401(k) Resource Center

Learn More
Quote icon

The plan audit is so much smoother, and I don’t dread this process like I used to. It is dozens and dozens of hours off my team’s shoulders.

Eric Neumann
Sr. Director of Compensation, Benefits & HRIS, APTIM Corporation

By adopting solutions like PEPs or other innovative strategies, CFOs can offer robust benefits while reducing inefficiencies and risks. Now is the time to evaluate your current retirement plan’s performance and consider alternatives that align with both employee expectations and organizational needs and objectives. Balancing business sustainability with employee satisfaction is no small task, but with the right solutions, it can be done efficiently and effectively.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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