Measuring and improving participation rates

What is the participation rate?

The participation rate is the percentage of eligible employees actively contributing to your plan.

Example: If your company has 300 eligible employees and 240 are contributing, your participation rate is 80%.

Tracking this over time lets you measure engagement and evaluate whether changes to your plan are producing results.

Why does participation matter?

Both employees and employers benefit from higher participation. For employees, it's the first step toward building retirement savings. For employers, strong participation usually means employees understand and appreciate the benefit. Other benefits include:

• Improved employee retirement readiness
• Greater value placed on the benefits package
• Stronger support for recruitment and retention
• Evidence that financial wellness initiatives are working
• Greater overall engagement with the plan

Participation is often the first metric evaluated when assessing a plan's health.

What causes low participation?

A few common barriers keep employees from enrolling:

• They don't fully understand how the plan works
• They believe they can't afford to contribute
• They're overwhelmed by the investment choices
• They intend to enroll later but keep putting it off
• They don't realize the employer offers matching contributions

Understanding why employees aren't engaging is the first step toward improving participation.

Improve employee education

Many employees simply need a better understanding of how the plan works. Meetings, webinars, enrollment guides, and one-on-one conversations can explain:

• The benefits of starting early
• How employer matching works
• The basics of investing
• The power of compound growth
• How to enroll and update contributions

The more confident employees feel, the more likely they are to participate.

Promote the employer match

If your organization offers matching contributions, make sure employees understand the value.

Example: An employee earning $50,000 who contributes 5% saves $2,500 annually. With a dollar-for-dollar match up to 5%, another $2,500 is added — $5,000 total before investment growth.

Helping employees understand the match often motivates them to enroll and contribute enough to receive the full benefit.

Simplify the enrollment process

Complicated enrollment procedures discourage participation. Make enrollment as simple as possible by providing:

• Clear instructions
• Easy access to enrollment forms or online portals
• Deadlines and reminders
• Contact information for employees who have questions

Reducing confusion often leads to higher enrollment.

Consider automatic enrollment

Many employers have found success with automatic enrollment, where eligible employees are enrolled unless they opt out. Research consistently shows it can significantly increase participation, particularly among younger employees. If your plan doesn't already offer it, it may be worth discussing with your advisor.

Measuring success

Participation should be reviewed regularly, not just once a year. In addition to overall participation, consider tracking:

• Participation by department or location
• Participation among new hires
• Average employee contribution rates
• Percentage of employees receiving the full match
• Changes in participation after education campaigns or plan enhancements

Reviewing these trends over time helps identify what's working and where more attention is needed.

The bottom line

A strong participation rate is one of the best indicators of a healthy plan. By measuring participation regularly, identifying barriers to enrollment, and investing in education and communication, plan sponsors can create a program employees understand, appreciate, and actively use. If you'd like help evaluating your plan's participation, reach out to one of our advisors today.