Art by Brad Holland

2016 Participant Survey

The PLANSPONSOR Participant Survey examines the attitudes and behaviors of American workers participating—or not—in an employer-sponsored retirement plan. It gathers data about savings rates, employer expectations and confidence levels, among other measures.

Published in PLANSPONSOR April 2016

Navigate Research


Echoing a common theme within the industry, our 2016 Participant Survey found that Millennials, Generation X and Baby Boomers have different needs and expectations regarding retirement. Not surprisingly, younger employees, who are likely battling competing financial priorities, save less than older employees, who may be trying to catch up on their retirement savings.

The good news is that younger employees are more interested in learning how to improve financial outcomes, with 44.6% “agreeing” that they would like to receive more financial education at work. But sponsors will likely find it challenging to reach this group in large scale as only 34.9% of Millennials say they “usually” or “always” read plan communications (vs. 54.2% or pre-retirees). Plan sponsors might consider varying messaging and format of messages to maximize the reach of their communications.


FALSE CONFIDENCE. The percentage of respondents who reported being “confident” or “very confident” that they will achieve their retirement goals dropped to 29.8%, the lowest overall confidence in the survey’s three-year history. Financial stress plays a major role in retirement confidence, as 90.1% of those who were “not at all confident” reported having severe financial stress. Similarly, the overwhelming majority (87.4%) of those who report that they “usually” or “always” feel they are living paycheck to paycheck have either no or low confidence that they will achieve a comfortable and secure retirement. But these numbers may be understated, as 58.8% of those who are “confident” or “very confident” in achieving their retirement goals expect they will need to replace less than 70% of their current income in retirement—a number that is below the 85% often cited in the industry.


CENTS AND SENSIBILITY. For some, the prospect of saving for retirement can feel overwhelming or even pointless, but the first step toward achieving retirement success may be as simple as setting a goal. This year, respondents who reported having saved over $250,000 in total for retirement were three times as likely to have said they have a retirement savings goal as those who have saved less than $50,000 (46.8% vs. 16.2%). Similarly those who have saved over $250,000 were four times as likely to have worked with a financial adviser as those who have saved less than $50,000 (44.6% vs. 10.4%). There is perhaps a “chicken and egg” paradox with these numbers—did having the goal result from working with the adviser or did having the goal lead to working with the adviser?—still the connection between “taking action” and “achieving results” seems very clear.


INCOME INEQUALITIES. Total household income and total retirement savings are understandably correlated—69.5% of respondents with less than $50,000 in total income had less than $50,000 in retirement savings while only 11.6% of those making more than $100,000 in total income had saved so little. The reality is that lower-income households need less in retirement savings to replace the same amount of retirement income as higher wage earners, so total retirement savings may not be the best measure of success. Unfortunately, our 2016 Participant Survey confirms that lower incomes lead to lower deferral rates. Overall, only 23.0% of individuals in households with total income of less than $50,000 defer more than 6% of their salary while 54.9% of those making more than $100,000 defer more than 6%. In a perfect world, these rates would be the same—ideally, higher.


IMPACT OF DC PLANS. Service providers have long advocated the benefits of offering defined contribution (DC) plans to employers, promising that such plans help “attract and retain” employees. While supporting evidence of such claims has remained illusive, our 2016 Participant Survey does show that DC plans have a material and positive impact on employee behavior and outcomes.

One thing seems certain: The presence of a defined contribution plan significantly improves employee awareness of the key financial/retirement concepts. For example, respondents working for organizations that offered DC plans were twice as likely to have established retirement goals as employees without access (30.8% vs. 15.3%). Further, employees without access to DC plans were almost twice as likely to wish their employer offered more financial education at work (66.7% vs. 39.0%). Finally, the percentage of participants who “don’t know” how much income they need to replace in retirement dropped by more than 40% (from 43.2% to 24.5%) when DC plans were present.

Defined contribution plans also improve employee perceptions as to the generosity of benefits offerings. Employers offering the plans were more than twice as likely (39.0% to 17.5%) to have their benefits described as “generous” or “very generous” as companies that did not offer a retirement plan.

Still, the question of whether a DC plan has value is largely subjective. Employers unconvinced of their value might consider this more direct finding: 58.9% of respondents without access to a DC plan were at least “somewhat likely” to participate in such a plan if one was offered. Given the challenges that many people face in saving for retirement, the potential for improved coverage, greater financial awareness, and a better perception of employer generosity would seem to reinforce the value of DC plans.


Employers always face trade-offs when designing benefits programs. How would employees make such decisions? Our Participant Survey offers insights and highlights the challenges employers face.

NOW OR LATER. Employees are largely split over short-term vs. long-term benefits. A slight majority (52.2%) would choose a one-time $5,000 contribution to their 401(k) over a one-time $5,000 bonus. Similarly, a surprisingly high 45.5% of respondents would opt for a 3% immediate match over a 6% match vested after five years—despite the latter’s larger potential benefit—while 47.8% would prefer a $250/a month reduction in insurance premiums over a $250/a month contribution to their 401(k).

MORE OR LESS. 63.4% of respondents chose a $2,500 dollar-for-dollar match over a $1,500 employer contribution, but that number fell to 49.3% when the match was stretched, requiring a higher employee contribution.

FIXED OR VARIABLE. Employees value certainty vs. opportunity, as 65.2% would accept a 3.5% guaranteed return on their savings vs. a market-based return that might greatly exceed 3.5% but could also lose money. When the guarantee was reduced to 3.0% a rate many think will not outpace inflation—a majority (60.6%) still opted for the guaranteed return.

HIGH OR LOW. Employees largely do not care about “beating the market.” An overwhelming majority (76.9%) are willing to pay lower fees and accept “average” returns vs. paying higher fees for the chance to receive “above average” returns. Interesting, 53.4% are even willing to accept “below average” returns if it means avoiding higher fees. —BOK


The 2016 PLANSPONSOR Participant Survey was conducted via a blind online questionnaire in early March 2016, using a broad sample of U.S. workers from ResearchNow, an online panel provider. A total of 1,052 full-time employed adults aged 23 and older responded to the 40 question survey, which covered a range of retirement savings habits and perceptions. Among respondents, 764 (73%) currently contribute to a 401(k), 403(b), or 457 defined contribution (DC) savings plan while 83 (8%) have access to a DC plan but have elected not to contribute to the plan; 129 respondents (12%) worked at organizations that do offer a DC plans. The final data reflects a balance of demographic attributes, including gender, race/ethnicity, household income, and formal education, and was similar to results from the 2014 and 2015 surveys. The sample was not weighted to reflect national averages. For more information, contact Brian O’Keefe at


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In March, PLANSPONSOR surveyed 1,035 employed adults ages 23 and older regarding their access to and usage of defined contribution plans. The final data reflected a balance of demographic attributes and was in line with distributions from our 2014 and 2015 surveys.