New research has revealed some telling patterns in employee retirement plan contribution rates. According to PLANSPONSOR’s 2025 Participant Survey, nearly 4 in 10 participants said that – when choosing their rate – they simply stayed with the plan’s default setting. What this means is that the default doesn’t always just start the retirement savings journey. For a significant portion of the workforce, it can end up defining it. The finding reinforces long-held notions around status quo bias and choice overload. That is, when a decision is complex or abstract, many people gravitate toward the path of least resistance. While auto enrollment and other plan design features have been successful in increasing participation, forward-thinking sponsors can consider doing even more.

Plan Design is Key
Plan sponsors have many design options available to them – beyond basic auto enrollment features – to further draw on the influence of behavioral economics. For example…

• Raising the initial auto enrollment deferral rate: Increasing the rate can help employees get a faster
start on their savings journey.
• Enhancing automatic escalation settings: Sponsors can increase individuals’ contribution rates over
time by adding or, if applicable, raising, the annual auto escalation increment and/or increasing the
escalation cap.
• Stretching the match: Sponsors also can encourage higher employee contributions by stretching their
match formula. For example, assume a sponsor currently matches 100% of participants’ contributions
up to 3% of their salary. The sponsor could encourage people to double their own rate of savings – while
holding the company’s match costs level – by instead matching 50% of contributions up to 6% of salary.

Hands-on Guidance Can Play a Crucial (and Welcome) Role Too
While plan design and automatic features can have a positive impact, there’s strong evidence that people
also want additional, hands-on support as they make money decisions. Morgan Stanley at Work’s annual
State of the Workplace Financial Benefits Study, for example, shows workers are looking for financial and
retirement guidance. Of the options provided, respondents expressed the strongest preference for access
to a financial advisor (47%) through their employer plan, with goals-based investment planning (45%) and
retirement income solutions (43%) not far behind.

From systematized plan design settings to hands-on guidance, sponsors and advisors may want to look for ways to help people move “beyond the default” and into paths that could set them on a better course for retirement readiness.

Sources:
https://www.plansponsor.com/surveys/2025-participant-survey/
https://institutional.vanguard.com/content/dam/inst/iig-transformation/insights/pdf/2025/has/2025_How_America_Saves.pdf
https://www.cnbc.com/2025/06/04/average-401k-savings-rate.html
https://www.fidelity.com/learning-center/smart-money/average-401k-match
https://www.psca.org/news/psca-news/2025/5/economic-uncertainty-has-reduced-employee-saving
https://www.psca.org/news/psca-news/2025/11/auto-enrollment-less-popular-with-small-plans-but-gap-is-narrowing/