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How to Keep Employees Contributing to the Plan


For many employers, especially smaller ones, introducing a retirement plan is a big undertaking. Despite the numerous administrative and regulatory requirements that an employer retirement plan entails, many employers remain committed to their retirement plans because they want to help their employees begin the journey to retirement readiness.

Unfortunately, plan participants can sometimes feel squeezed financially and find it hard to sustain their original commitment to saving for their own retirement security. All too often, other competing and more immediate demands are made on their income, forcing them to reduce or suspend contributions to their plans. While it can be disheartening for employers to see participation rates drop off and contribution levels fall, there are steps they can take to keep employees contributing to their retirement plans. Here are some ideas worth considering.

Take a Fresh Look at Your Plan

Would employees participate more and contribute at higher levels if your plan offered or increased matching contributions? Would a more generous vesting schedule encourage higher participation rates? Would offering a plan loan program have any impact? It can be helpful to reassess and review the way your plan is structured to see how it could become more attractive to employees.

Focus on Regular Communications

Use every available platform -- live meetings, webinars, emails, intranet articles, etc. -- to highlight all the benefits of plan participation. When you reach out to your employees regularly, your messages should always affirm that:

  • Plan participants can reduce the income taxes they currently pay when they contribute to their tax-deferred retirement plan.
  • Participants do not have to pay income tax on pretax contributions or on any income their contributions might earn until they withdraw money from the plan.
  • Contributions in a tax-deferred retirement account can potentially compound more quickly than savings in a taxable account.
  • Employer matching contributions are an extra benefit -- essentially a bonus that stops when a participant stops contributing to the plan.


Remind Participants That Social Security May Not Be Enough

Social Security retirement payments are a safety net. They help retirees pay their most basic expenses. The reality is that most people will have to save for retirement if they want to maintain a standard of living in retirement that is similar to the one enjoyed while working. There really isn't an alternative -- and an employer-provided retirement plan is one of the best retirement saving options available.

Educate Participants on the Impact of Halting Contributions

It can be helpful to illustrate for participants just exactly how the growth of their retirement plan assets could be affected if they stop contributions even for a short time. They need to understand that temporarily discontinuing plan contributions can come at a high cost.

Help Employees Toward Financial Literacy

Trying to pay off student loans, saving for that first home, or setting money aside for a child's college education can leave little left over from the average person's paycheck. There's little question that the competing financial demands of modern life can be a struggle for most people. However, plan participants need to believe that it is possible to set aside money for retirement and save for other short- and long-term goals. There are financial education resources and tools available that help people budget, manage debt, and lay the groundwork for financial wellness. Your plan's investment managers or recordkeeper may have these resources available.

Talk with your financial professional. Together, you can develop a strategy to encourage your employees to keep participating in your company's retirement plan.