Plan Sponsors

Employees to plan sponsors: Tell us about the match


Click here for a downloadable version. (PDF)

An employer match is one of the most significant factors in determining whether or not employees participate or contribute to a defined contribution plan.1 The good news is that 78% of Americans who contribute to an employer-sponsored retirement plan get matching contributions from their employers, and 77% of those who get matching contributions save enough to get the full match.2 But even with this level of success, employers can do more to increase the impact of their match by developing a targeted outreach campaign that encourages all employees to contribute to their match level.

Missing the match

Plan sponsors would like to see all of their employees take full advantage of the "free money" available through their plan match, but 23% of employees are foregoing some or all of the match. These are often the same individuals who would benefit most from additional savings (see Exhibit 1).

Exhibit 1: Who isn’t meeting their match?

Who isn't meeting their match?

A closer look at the survey results shows that certain groups are not making the most of their match:

Bringing the match to all

Once you know which employees are not maximizing contributions, you need to understand what would convince them to do so. Employee motivations vary by demographics, but most workers agree that they want communications about matching contributions. The majority (72%) of respondents who are not saving enough to get the match want to hear from you about matching contributions (see Exhibit 2).

Exhibit 2: Employees want to hear from you about the match

Does your employer send reminders about matching contributions?

One approach to consider is an outreach program that encourages employees to find out how much matching funds could potentially be worth in retirement. Employees who might forego 3%, which sounds small, might be less willing to walk away from a concrete number like $72,000.3

The survey found that many people do not fully understand the value of the match: One-third (32%) of respondents underestimated the value of a 3% match in a given set of circumstances.  Certain groups were even more likely think the match was worth less than it was: 37% of women, 42% of respondents age 18-34, and 48% of respondents who earn less than $35,000 per year. (Click here for an article you can share with your employees about the benefits of the match, including a quiz about how much a given match could be worth.)

Make the most of your match

The fact that certain groups of employees are less likely to meet their match is an opportunity to target communications to those groups.

For instance, for employees at the low end of the income scale, you can acknowledge the difficulties of saving for retirement and position the matching contribution as an effective way to increase their savings. However, this should be handled carefully.  Employees earning less than $35,000 are less likely to want reminders about the employer match than those earning more.

You may also want to consider targeted outreach programs to women; it may be even more important for women than men to maximize their savings, since they live longer and are more likely to have periods when they are not working and saving, while they care for children or elderly parents.  The good news is that survey results indicated women are more interested than men in engaging and learning about the match. Of those not receiving the full match, 17% of women (compared to 10% of men) said that more information about how the match works would make them consider increasing contributions.

Matching contributions are not a new plan design tool, but by taking a fresh look at your existing match you can increase its impact and improve the retirement readiness of your employees. Talk to your TIAA-CREF relationship manager about targeted engagement strategies to help you make the most of your match.