The study found direct links between how often a retirement seminar is offered and increased levels of 401(k) activity—especially among those employees lower down on the pay scale. Participation rates by non-highly compensated employees are 11.5% higher with plans that offer frequent seminars, than those with no seminars, according to a press release. For highly compensated employees, participation is 6.5% higher when seminars are more regularly available.
In firms where participation is historically low, the number of employer-sponsored seminars spiked—which the researchers said is a strong indication that retirement seminars are remedial.
The study found employers don’t offer retirement education solely for altruistic reasons. In addition to helping employees prepare for retirement, the seminars introduce workers to the value of the company’s existing pension plan and help stave off subsequent demands on employers for more generous plans. “Assistance with financial planning may also enhance employee loyalty, improve labor relations, and boost morale,” the authors contend.
“The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers” uses the KPMG Peat Marwick Retirement Benefit Survey to conduct a detailed investigation into employer-based retirement training programs. In the KPMG survey, 1,100 public and private employers were chosen randomly and interviewed both in 1993 and again the following year. Using variables such as firm characteristics, retirement plan characteristics, and 401(k) plan characteristics, the authors evaluate the relationship between education and behavior.
The study article can be purchased here.