Adoption of an automatic enrollment into a 401(k), has increased employee participation. This is bound to happen when they have no choice in the matter. But employers can also help improve participation and contribution levels in retirement plans by offering matching contributions. Who wants to leave free money on the table?
Based upon 2014 data, it was found that an employer’s match can double the annual retirement plan contribution among workers who said that getting the employer match was very important to them. Again who wants to leave free cash on the table?
The strongest group of savers were earning $48,000 to $95,999: this group increased their average retirement plan contribution by 2.5 times because of an employer match, according to Hearts & Wallets.
Alas the study showed that only 10 percent of the people surveyed were eligible for a retirement plan that offered a matching employer contribution of more than 6 percent of an employee’s salary, a third said their employer match was 4 to 6 percent, roughly another third said their match was 3 percent, and 24 percent said their employer offered no match.
As expected the size of the matching contribution often depended on the size of your employer.