Why Millions of Eligible Workers Do Not Contribute to Their Retirement Plans: It’s Not What You Think
A new study on workplace retirement plan enrollment trends reveals that a lack of awareness and understanding of plan features—not cost—is the primary driver of non-participation.
Ascensus today released the first Eligible Not Contributing Employee (ELND) Survey to understand why millions of employees who are eligible to participate in their workplace retirement plan are not contributing. Counter to expectations, the findings show that lack of plan awareness and understanding of plan features like employer match drive 60% of inaction versus perceived unaffordability of retirement savings at 23%.
“If employees do not understand their plans or how to begin, they rarely take action.”
Ascensus CEO Nick Good
In fact, 30% of employees indicated they did not know how the plan works or even how to get started.
The research also underscored the importance of early employer communications and education because time since eligibility is one of the strongest predictors of whether an employee will ever begin saving. Once employees remain unenrolled for 24 months, the research found likelihood of never enrolling doubles.
“Access to retirement savings is critical, but not sufficient to solve the retirement savings crisis in America,” said Nick Good, CEO of Ascensus. “If employees do not understand their plans or how to begin, they rarely take action. Clearer onboarding and enrollment, smarter personalization to encourage savings, and coordinated education with employers all help more individuals move from eligibility to actively saving.”
When asked what would motivate them to start saving, targeted education to address plan understanding and specific plan enhancements rose to the top with 50% of employees citing those areas. Twenty-seven percent said improving plan understanding would motivate them to action, with two specific plan enhancements also noted (13% citing plan offering employer match, and 10% citing simplified enrollment).
Gen Z slow to enroll
Additionally, proprietary data from Ascensus reveals sharp gaps in enrollment across generations. More than half of Gen Z workers eligible to enroll are not participating (50.5%), compared with 38.3% of Millennials and 37.2% of Gen X.
This points to the importance of understanding saver preferences when it comes to driving awareness and participation in retirement plans. For Gen Z in particular, while they face outsized financial pressures compared to other generations, the study found employers and recordkeepers must consider how to conform to this digital native generation and how they consume information and make decisions.
These findings reflect a broader, industry-wide challenge. Research from the Pew Charitable Trusts shows that nearly half of U.S. households are at risk of not having enough income to maintain their standard of living in retirement, and that insufficient engagement and access to employer facilitated savings vehicles are major contributors to the growing retirement savings gap.
In parallel, Pew Research Center reports that four in 10 U.S. adults are not confident they will have enough money to last throughout retirement, reinforcing that uncertainty and lack of preparedness are widespread, not isolated issues.
By pairing research-backed insights with scalable solutions, Ascensus said in a press release today it is committed to strengthening plan participation, improving savings behavior, and helping more Americans build lasting financial security—not just at the point of access, but throughout their savings journey.
The Ascensus Eligible Not Contributing Employee (ELND) Survey was conducted between July 16 and August 15, 2025, and distributed to more than 186,000 eligible but nonparticipating employees.
With more than $932 billion in assets under administration, Ascensus is a leading independent technology and service platform powering savings plans for more than 16 million people across America.
SEE ALSO:
• Ascensus Hits $300B in 529 Assets
• Why Increasing Access, Participation in Workplace Retirement Plans Needs to be Prioritized: Pew
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.