The more you know, the better you prepare for retirement.

That, and other findings, are part of a working paper from thePhiladelphia-based PensionResearch Council, which sought to learn whetherfinancial literacy is associated withhigher participation and contributionrates in the employer plan.

The paper’s researchers also evaluated, for those whoparticipated in the program, whether financial literacy influencessaving responses after exposure to a learning module.

Related: Here's what 401(k) education mustemphasize

The study, “Employee Financial Literacy and Retirement PlanBehavior: A Case Study,” pointed out that there hasn’t been muchstudy of how financial literacy varies by employee characteristics,and how that variation might play out in employee practices when itcomes to saving for retirement. So authors Robert Clark, AnnamariaLusardi and Olivia S. Mitchell set out to discover whether, and howmuch, variation might result from financial literacy or the lackthereof.

Their pool of subjects was all active employees of the FederalReserve System, and they drew on administrative data to examineparticipation in and contributions to the Thrift Saving Plan, thesystem’s defined contribution plan. Not only did the researchersexamine employee behavior, but they also examined changes inemployee plan behavior one year after employees completed alearning module about retirement planning.

Federal Reserve employees, the paper pointed out, “aresubstantially more financially literate than the population atlarge. Most importantly, financially savvy employees are also mostlikely to participate in their defined contribution plan.Sophisticated workers contribute three percentage points more oftheir earnings to the defined contribution plan than do the lessknowledgeable, and they hold more equity in their pensionaccounts.” But the results, nonetheless, were surprising in whereand among whom the differences occurred.

Survey findings

While the authors found little difference in financial literacyacross age groups, and only modest differences according to yearsof tenure, they did uncover larger differences depending on sex,marital status and annual salary.

For instance, 75 percent of the male Federal Reserve employeesanswered four or five of the literacy questions correctly, comparedwith just 56 percent of the female employees. In addition, 70percent of married employees also answered four or five questionscorrectly, compared with just 60 percent of nonmarried ones.

But the big differences came as salary levels rose. Those withincomes over $250,000 correctly answered four or five questions,with an average of 4.7 correct answers.

The learning module affected employee behavior by reducing plandropout rates and increasing participation rates, suggesting thatprogram participation positively affected employee behavior.

The paper concluded that not only did employer-providedinformation about the need to save for retirement increase“workers’ willingness to participate in and contribute” to theplan, but employers considering educational programs “can be moreconfident that these programs will boost employee awareness andenhance retirement readiness.”