Why Education Plays an Important Role in Your Employer-Sponsored Retirement Plan
When employers offer retirement benefits such as 401(k) plans or other defined contribution programs, they are providing an incredibly valuable tool for their workforce. But simply offering a plan may not be enough. The real value typically comes when employees understand how to use that benefit effectively. That is where education becomes a crucial element, not just a nice extra, but a foundational element of a retirement plan that drives meaningful outcomes.
Education Can Boost Participation and Engagement
Research shows that education significantly increases employee participation in retirement plans. One study found that 91 percent of employees who had access to financial wellness education enrolled in their workplace retirement plan compared with 76 percent enrollment without it. That is a 15-percentage point increase driven purely by education (nhbr.com).
Education Can Lead to Better Savings Behavior and Higher Balances
Participation is just the start. Education also influences how much employees save. According to data from a major retirement provider, study participants who engage with educational tools or financial advice save 29 percent more than those who do not and often have twice the account balance as their less educated peers (napa-net.org).
Understanding the mechanics of saving, compounding returns, employer matches, and investment choices can help employees make more informed decisions about their retirement plans.
Education Can Help Employees Understand the Purpose Behind Saving
People may make more informed financial choices when they understand the purpose behind them. A 2026 survey found that 60 percent of eligible workers who were not contributing to their retirement plan cited a lack of plan awareness and understanding of features like employer match as the primary reason for inaction, compared with 23 percent who pointed to perceived unaffordability. In fact, about 30 percent said they simply did not know how the plan works or how to get started. This underscores how important clear communication and education are in motivating participation and engagement. (ascensus.com)
Retirement plans are complex financial tools and without clear guidance even valuable benefits can feel overwhelming or confusing. Education can bridge the gap, helping employees see how decisions today affect their future quality of life and giving them the confidence to act.
Education Can Complement Plan Design
Plan design and automatic features such as auto enrollment have been shown to increase participation and savings on their own. But even the most thoughtfully designed plans can be more effective when participants understand them. Education reinforces plan features such as matching contributions or default escalation and encourage employees take full advantage of what is offered.
Employees are more likely to contribute enough to capture the full employer match when they understand it is essentially “free money”. Workers who engage with educational tools are more likely to see beyond short term needs and prioritize long term retirement goals.
Education Can Reflect a Commitment to Employee Financial Wellness
Retirement readiness is not just a financial issue; it is a major component of overall financial wellness. When companies provide employee education, it reflects a commitment to supporting their teams’ understanding of available benefits and financial concepts. This may in turn build trust, improve morale and may enhance the value of the retirement program itself.
A retirement plan with no education component risks becoming a checkbox benefit something employees know exists but do not fully understand or use. Education can transform a benefit into a behavioral shift where employees are informed, engaged and empowered.
Conclusion
At Confluence Retirement Plan Services, we believe that education is the foundation of a successful retirement plan. Our approach goes beyond simply offering a plan. We work with employers to provide ongoing education that helps employees understand how contributions work, how to maximize employer matches, and how to make informed investment decisions. By providing clear guidance and support, we help employees feel confident and engaged in their retirement journey. When employees understand their options and the impact of their choices, Confluence Retirement Plan Services can play a more active role in supporting their long-term planning efforts.
Interested in enhancing your retirement plan for your employees? Start a new plan or review your current one with Confluence Retirement Plan Services and see the difference education can make.