While there are differences in retirement saving behaviors between employees who work for for-profit companies and those who work for not-for-profit institutions, they have one thing in common: Nearly half save only enough for retirement to get the full amount of employer matching funds.

According to new research from the LIMRA Secure Retirement Institute, how the employer match is structured can drive defined contribution plan participants’ behavior.

If an employer matches 100 percent of the first three percent an employee puts away toward retirement, the employee typically will save a maximum of six percent.

If, however, the employer’s contribution is structured so that only 50 percent of the first 6 percent is matched, employees will typically save 9 percent—thus improving their chances of having enough money in retirement.

Another trait that both for-profit and not-for-profit employees have in common is that just 40 percent consider themselves “savers”; in addition, 20 percent of those who have access to a DC plan at work don’t contribute—although their reasons do differ a bit depending on whether the employer is a for-profit company or a not-for-profit.

For-profit workers who don’t contribute to workplace DC plans were more likely to say they can’ afford to or that they have competing saving priorities.

Not-for-profit workers, on the other hand, were less likely to say that (67 percent vs. 53 percent).

Pushing employees to save more through the structuring of employer contributions could be an important way to improve workers’ chances of a secure retirement—particularly since the research indicates that almost half of Americans believe they’re not saving enough for retirement, and approximately 40 percent of working households have managed to save less than $25,000 to retire on.

Read: Retirement crisis? What retirement crisis?

“The study demonstrates the powerful incentive a company match can have on employee behavior,” Michael Ericson, LIMRA Secure Retirement Institute analyst, said in a statement.

Ericson added, “Plan providers can help employers increase their employee’s savings behavior by recommending a stretch match strategy, which would require an employee to save a higher percentage to attain the full company match.”

Instant Insights /

How your company match can spur greater retirement saving

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