Topic: HR & BENEFITS

In today’s competitive labor market, retirement plans are no longer just a perk—they’re a strategic lever for business growth. For PEOs, the modern 401(k) offers measurable returns in productivity, retention, and client acquisition. As the PEO industry continues to expand and diversify, the ability to deliver scalable, high-impact retirement solutions is becoming a key differentiator.

FROM COST CENTER TO VALUE DRIVER

Historically, retirement plans have been viewed as a compliance requirement or a line-item expense. That perception is changing. According to the Employee Benefit Research Institute (EBRI), consistent participation in 401(k) plans leads to significant asset growth, especially among younger employees. This financial security translates into higher engagement and lower turnover.

PEOs are uniquely positioned to help small and mid-sized businesses unlock this value. With more than 230,000 U.S. businesses now partnering with PEOs—representing 15% of employers with 10 to 499 employees—the opportunity to scale retirement benefits across industries is substantial.

BOOSTING PRODUCTIVITY THROUGH FINANCIAL WELLNESS

Research from the Society for Human Resource Management (SHRM) shows that nearly 60% of employees cite retirement benefits as a key reason they stay with an employer. That sense of security fosters a more stable and productive workforce—something every PEO client values.

That productivity benefit is key. According to a 2023 Price Waterhouse Cooper financial wellness survey, employees distracted by money worries are less focused, less engaged, and more likely to miss work. A well-designed 401(k) plan can help address this.

Features like auto-enrollment, target-date funds, and managed accounts also help simplify employees’ decision-making and encourage participation. When paired with financial education, these tools empower employees to take control of their future.

REDUCING TURNOVER WITH SMART PLAN DESIGN

No matter what industry you work in, turnover is costly. Recruiting, onboarding, and training new employees takes time and resources. Retirement plans can help reduce churn by creating long-term incentives for employees to stay.

Key plan design elements that support retention include:

• Employer match: Encourages participation and builds loyalty.
• Vesting schedules: Reward tenure and discourage early exits.
• Portability: Allows employees to take their savings with them, increasing perceived value.

According to a 2024 survey published on Napa-net.org, HR leaders cited employee benefits packages as the key retention factor for 33% of employees remaining at their current company. For PEOs, offering customizable retirement plan designs across adopting employers can be a powerful retention tool.

ATTRACTING TOP TALENT AND CLIENTS

Benefits matter. Job seekers are evaluating employers not just on salary, but on total compensation. A competitive 401(k) offering signals stability, investment in employees, and long-term vision. According to Morgan Stanley at Work’s fifth-annual State of the Workplace Financial Benefits Study, roughly 7 in 10 (69%) HR executives believe access to retirement planning assistance from financial professionals is a top or high priority for employees when choosing where to work.

PEOs that deliver robust retirement solutions help their clients stand out. This is especially important in industries like healthcare, construction, and professional services, where skilled labor is in high demand.

Recent research from NAPA-Net shows that plan sponsors are prioritizing 401(k) design as part of their talent strategy. For PEOs, this means retirement plans are no longer optional—they’re essential to winning and retaining business.

MEASURING ROI: WHAT TO TRACK

Quantifying the return on a 401(k) investment requires looking beyond plan costs. Key metrics to monitor include:

• Participation rates: Higher rates indicate employee engagement and plan effectiveness.
• Retention rates: Compare turnover before and after plan enhancements.
• Productivity indicators: Track absenteeism, performance reviews, and engagement scores.
• Client acquisition and satisfaction: Use surveys and feedback to assess how benefits influence buying decisions.

While some of these metrics are qualitative, they provide valuable insight into how retirement plans impact business outcomes.

PEO INDUSTRY MOMENTUM SUPPORTS INVESTMENT

The timing for retirement plan investment is ideal. According to NAPEO’s Q2 2025 PEO Pulse Survey:

• 75% of PEOs reported revenue growth, and 79% saw increased gross profit.
• 72% increased their client base, and 93% expect growth in worksite employee counts over the next year.
• The PEO Expected Growth Index was 4.07 in Q1 2025, signaling strong optimism.

This momentum creates a favorable environment for expanding retirement offerings and demonstrating their value to clients.

TODAY’S 401(K): A STRATEGIC IMPERATIVE

The modern 401(k) is more than a benefit—it’s a business strategy. For PEOs, offering flexible, high-impact retirement plans helps drive productivity, reduce turnover, and attract top-tier clients. As the industry grows and evolves, retirement solutions will play a central role in shaping workforce outcomes.

PEO leaders should evaluate their current offerings and consider enhancements that align with client goals. By doing so, they position themselves not just as service providers, but as strategic partners in long-term success.

This article is designed to give general and timely information about the subjects covered. It is not intended as legal advice or assistance with individual problems. Readers should consult competent counsel of their own choosing about how the matters relate to their own affairs.

From generational clashes to differing views on diversity, remote work, and ethics, today’s PEOs and their HR Professionals are navigating a more divided employee environment than ever before.

As inflation, student debt, and healthcare costs continue to strain household budgets, employees increasingly expect their employers to act as partners in financial health.

The post-pandemic surge in anxiety, depression, OCD, and eating disorders isn’t just more of the same—it’s faster-moving, earlier-onset, and hitting employer health plans harder. PEOs can blunt this by pairing proven therapies (like ERP/CBT) with modern, always-on digital supports, closing the “pre-claim” gap before crises spill into costly claims.

WHY DID THIS BECOME A CRISIS?

Before 2020, mental health needs were already widespread, yet many people waited years to get meaningful care. Today, about half of U.S. adults with a mental health condition receive treatment, and the average delay from first symptoms to first treatment is roughly 11 years—an eternity in a working life.

COVID-era isolation accelerated symptom onset and severity, especially in adolescents and young adults. CDC analyses show sharp increases in emergency-department visits for behavioral health, including eating disorders (EDs) among adolescent females doubling during the pandemic—a canary in the coal mine for broader anxiety, OCD, and mood concerns.

At work, that isolation has lingered. The U.S. Surgeon General now warns that loneliness is a public-health threat tied to worse health and productivity—making social connection a legitimate workplace priority, not a “soft” perk.

Bottom line: post-pandemic, conditions are emerging earlier and escalating more rapidly. The longer people wait, the more likely symptoms are to harden into disability and high-cost claims.

FROM STIGMA TO SKILLS GAP

When we sit with employees and their families, two themes repeat:

Recognition lag. People often don’t realize early that what they’re experiencing is anxiety; OCD, depression, or an ED—and screening rarely happens until a crisis. (Again: 11-year average delay.)

Skills gap. Even when people understand the problem, they often lack practical, coached skills to respond effectively. They’re not broken; they’re under-skilled in coping—especially after pandemic-era isolation. Teaching those skills early (emotion regulation, cognitive reframing, ERP for OCD, self-compassion, sleep hygiene) can change trajectories.

WHAT ACTUALLY WORKS (AND SCALES)

ERP/CBT as first-line care. For OCD and related anxiety disorders, Exposure and Response Prevention (ERP) is a first-line, evidence-based therapy. Meta-analyses show ERP—particularly when blended with medications as appropriate—outperforms meds alone. For depression/anxiety, structured CBT has decades of evidence.

Digital CBT/step-care. High-quality digital CBT (with or without human support) consistently shows moderate effectiveness for mild-to-moderate symptoms, improving access between appointments and after EAP sessions end. This makes digital support ideal as a pre-claim buffer—meeting people at the “first-help” moment, building skills before crises escalate.

AI coaches—promise with guardrails. Early randomized trials of CBT-style chatbots (e.g., Woebot) reduce symptoms vs. information-only controls—useful for subclinical or mild-to-moderate cases. At the same time, quality varies; studies can be small, and crisis handling must be explicit. The takeaway: AI can extend reach and repetition, but must be embedded in a safe, supervised care pathway.

THE PEO OPPORTUNITY: A “MENTAL-HEALTH STACK” THAT CLOSES THE CLAIMS GAP

Traditional EAPs are valuable but chronically under-utilized (often ~5–10% utilization; median 5.5% reported by large employers in recent surveys). That means most employees never make it to their first session. PEOs can solve this by stacking benefits, so employees encounter help before they’re ready to call the EAP—and by making pathways clear and stigma-free.

A Practical 5-layer Stack Peos Can Roll Out:

1. Normalize & screen (universal, light-touch). Add routine PHQ-9/GAD-7 screening to wellness touchpoints. Pair with micro-learning on stress, sleep, and coping—and make opt-in privacy clear. Early identification shrinks the 11-year delay.
2. Always-on skills training (pre-claim). Offer digital CBT/ERP-informed tools (including AI-coaching apps with transparent escalation rules) to build daily coping: thought labeling, exposure ladders, urge-surfing, sleep routines. This creates a bridge when EAP visits run out, or therapy is wait-listed.
3. Modernized EAP (early-claim). Increase utilization through frictionless access (QR codes, same-day tele-slots), plain-language campaigns, and manager scripts. Consider visit expansions for OCD/ED tracks that include ERP-trained clinicians. (Evidence for ERP in OCD is strong; ensure networks actually provide it.)
4. Specialty pathways (complex care). Contract for OCD (ERP), ED programs, trauma, and pediatric/adolescent tracks. Use a step-care design: digital skill-building → EAP/tele-therapy → specialty ERP/ED care. For adolescents, be vigilant: pandemic-era data flagged EDs as a fast-rising risk.
5. Social connection at work (prevention). Treat belonging as a health intervention. Embed team rituals, peer circles, structured mentorship, and manager “connection minutes.” It’s not fluff—the Surgeon General ties connection to better health and productivity.

WHAT EMPLOYERS (AND CARRIERS) GAIN

Mental health investment pays off. The WHO estimates a 4:1 return for scaled treatment of depression and anxiety (better health and ability to work). New employer-side analyses also show material claims reductions from enhanced behavioral health benefits. Moreover, integrated behavioral-medical models are linked to lower overall medical spend—because untreated mental health worsens chronic conditions.

If you’re a CFO, think in buffers:

• Pre-claim digital supports deflect a portion of ED/ER spikes and urgent care.
• Early-claim ERP/CBT shortens episode duration and reduces relapse.
• Connection at work nudges absenteeism/presenteeism in the right direction.

Even the humble EAP can move from a line-item few use to a front door many trust—if you fix pathways and promote it relentlessly.

HOW TO USE AI RESPONSIBLY IN BENEFITS (GUARDRAILS WE RECOMMEND)

Scope clearly. Position AI coaches as skills companions, not crisis care or diagnosis. Build automatic handoffs to human support when keywords/assessments indicate risk.

Clinical backbone. Favor tools grounded in CBT/ERP with transparent content provenance. Pilot with measures (PHQ-9/GAD-7) and publish outcomes.

Privacy by default. Require clear data handling, encryption, and no data resale; separate identifiable data from HR decision-making. (Trust drives utilization.)

Equity & access. Offer multimodal access (text, voice, low bandwidth) and language options; watch for bias in prompts and pathways.

Human connection first. Encourage peer groups, manager check-ins, and live therapy—AI should augment human care, not replace it.

VOICES FROM PRACTICE

“We see the fastest progress when people learn to do skills daily. Whether it’s ERP for OCD or compassionate cognitive skills for depression and ED recovery, reps matter. Digital tools can keep those reps going between sessions,” says Tara Deliberto, PhD, head of psychology with Yuna.

“There’s a mental-health gap that shows up as avoidable, escalating claims—and that’s a deep concern for carriers. If HR and EAP can push neutral, stigma-free pre-claim tools in front of people—screening, skills training, and ERP/CBT exercises—you change the curve. With clear guardrails, technology becomes a claims buffer: it catches issues earlier, shortens episodes, and reduces relapse,” adds Lucas Siegel, head of growth with Yuna.

“As a parent supporting a young adult through OCD, I learned that motivation rises and falls—what matters is having help in the moment. The difference between spiraling and stabilizing is often a small, timely nudge: a breathing drill, an exposure step, a reframing prompt, or a real person to text,” says Corey Hookstra, president of ESI.

WHAT TO IMPLEMENT THIS PLAN? A QUICK, PEO-READY CHECKLIST

1. Make it normal. Add brief, opt-in screening and a plain-English “ways to get help” flow in every onboarding and open enrollment. (QR codes everywhere.)
2. Add a pre-claim layer. Contract a vetted, evidence-based digital CBT/AI-coaching solution with crisis escalation and ERP content. Track activation and skill completion.
3. Upgrade your EAP. Negotiate same-week tele-appointments, publish wait times, and ensure access to ERP clinicians for OCD/EDs. Promote monthly.
4. Build social connection. Create cadence for team rituals and peer circles; train managers to lead connection minutes.
5. Measure what matters. Track utilization, time-to-first-help, PHQ-9/GAD-7 change, completion of skill modules, and downstream claims trends (behavioral and medical comorbidity). Expect a multi-quarter arc; look for early movement in help-seeking and symptom scores.

THE UPSHOT

Mental health needs are more visible, faster moving, and costlier when ignored. The fix isn’t mysterious: normalize early help, teach skills daily, ensure specialty therapies like ERP are reachable, and use AI carefully to keep people practicing between human touchpoints. Do that, and you don’t just lower claims—you change lives, at work and at home. Everyone is worth it.

Strategic screening is essential for protecting your organization’s most valuable assets: your people, your clients, and your intellectual property.

Recognition fuels engagement across age groups. ZayZoon’s Motivating and retaining Gen Z report found that half of Gen Z employees don’t feel heard or valued.

A strong culture doesn’t happen by chance; it’s built on a foundation of trust, transparency, and a shared purpose. Just like the best sports teams, a successful organization has a mission and a set of core values that guide every decision and action.

So today, when I hear someone say, “We already have HR,” my response is: Exactly. That’s why a PEO makes sense.

Artificial intelligence offers a new model for supporting members and managing plan risk. Not as a bolt-on chatbot or flashy gimmick, but as an integrated engine that drives every interaction—proactively and intelligently.

Despite the challenges, the benefits of value-based care are significant. This model encourages preventive care, early intervention and chronic disease management – leading to better health outcomes for patients.

The strength of your benefits package isn’t just what you offer; it’s how well your employees understand and use it.

More businesses are offering retirement plans—not just because they have to, but because employees expect it. For PEOs, that shift creates a clear opportunity: to help clients go beyond basic compliance and build retirement solutions that serve both their teams and their business goals.

State-sponsored programs have pushed this issue into the spotlight. But the real conversation for PEOs is about value—how to help clients offer plans that employees understand, use, and appreciate. Plans that improve financial outcomes and support long-term workforce stability.

So how do you get there? This article explores practical ways PEOs can lead on retirement strategy and bring meaningful value to clients and their teams.

WHAT’S CHANGING AND WHY IT MATTERS NOW

More than 30 states have either launched or proposed retirement savings programs. Most follow an auto-IRA model: employers that don’t offer a plan must facilitate employee payroll deductions into a state-managed Roth IRA.

These programs are simple by design. But simplicity has trade-offs. Employers can’t contribute, investment options are limited, and administrative support varies widely. That leaves room for PEOs to offer alternatives that better fit client goals.

As a PEO, you likely already manage payroll, benefits, and compliance for clients across multiple jurisdictions. You’re well-positioned to fold retirement support into the broader HR ecosystem—and help clients make smarter decisions about plan design, communication, and execution.

FROM OBLIGATION TO OPPORTUNITY

State mandates can feel like one more box to check. But for PEOs, they’re also a chance to lead smarter conversations about long-term financial wellness. When a client gets a state notice about mandatory retirement enrollment, the instinct is often reactive: What do we have to do? But what if the conversation shifted to: What’s best for your employees?

Here’s where PEOs can lean in.

Make plan selection intentional. Whether it’s a simple IRA, a state-facilitated plan, or a PEO-sponsored 401(k), your clients need support understanding what each option offers—and what it doesn’t. Match the plan to their workforce size, budget, and goals.

Simplify the employee experience. Employees don’t enroll in plans they don’t understand. Make it easy. Provide ready-to-use content and tools that explain how contributions work, why it matters, and how to get started—even if it’s just $10 per paycheck.

Align payroll and systems. Retirement plan effectiveness lives or dies in the details. Payroll deductions must be timely. Contribution limits must be tracked. Plan data must stay clean. PEOs are uniquely equipped to make sure those details don’t get lost.

FIVE BEST PRACTICES FOR PEOS TO SUPPORT RETIREMENT SUCCESS

PEOs are doing more than just managing risk. You’re helping your clients build workplaces where people feel valued and supported. These five practices can move that forward.

1. Know your clients’ footprint. State mandates vary. Keep a clear, current map of which clients are in which states and whether they’re subject to participation. Even if a client offers a plan, documentation may still be required to claim exemption.

2. Help clients compare options. State plans aren’t inherently bad—they’re just limited. For a growing client, the lack of employer matching or limited investment flexibility may become a pain point. Be ready to explain how a PEO 401(k), MEP, or pooled plan stacks up in terms of cost, control, and employee experience.

3. Build for engagement, not just enrollment. Auto-enrollment continues to drive higher participation across retirement plans. According to Vanguard’s How America Saves 2024, 61% of plans offered automatic enrollment in 2024—including nearly 80% of plans with 1,000 or more participants. For PEOs managing retirement plans that span multiple worksite employers, this trend offers a strong benchmark for plan design decisions.

Participation is a strong start—but long-term engagement takes more than a default setting. Employees who feel confident about saving—and understand how their plan works—are more likely to contribute consistently. PEOs can support this by making retirement education a standard part of onboarding, offering financial wellness tools, and helping clients foster a culture of long-term saving.

4. Track performance and trends. Use data to assess participation, average contribution rates, and opt-out patterns across client groups. Tracking can help identify where employees are engaged vs. where they’re opting out, where deferral rates are strong enough to support long-term savings, and where automatic enrollment or escalation might need adjustment. Overall, identifying patterns can highlight where extra support or plan design tweaks might help.

5. Remain flexible as the landscape shifts. Legislation will continue to evolve. Programs will expand. Some states will form tech-sharing partnerships, while others may explore alternative plan designs beyond the standard auto-IRA model, such as pooled or group retirement plans that allow multiple employers to participate.

LEADING THE CONVERSATION

How a business approaches retirement benefits can say more than any policy or perk—it shows what kind of relationship they want with their team. For many small and midsize employers, offering a plan communicates that they care about long-term employee security. PEOs are in a prime position to make that promise real.

By staying informed, aligning the right plan to the right client, and providing practical support, you help clients deliver on their commitments to employees.

At the same time, you reinforce the value of the PEO model. Your ability to manage complexity, provide strategic guidance, and create integrated solutions sets you apart in a crowded HR services market.

A LOOK AT WHAT’S AHEAD

State mandates may be growing, and federal momentum is building—but at the heart of it all is a simple truth: people need real opportunities to build financial security. Access is a start, but it’s not the finish line. What matters most is making saving feel doable, dependable, and built to last.

This is where PEOs can lead with purpose—helping clients not only meet new requirements but build retirement programs that last. The future of work depends on financial security. And that future starts now.