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Data & Research March 10, 2026
Why Eligible Workers Are Sitting Out on Retirement Plan Contributions
Data from PLANSPONSOR and Ascensus show an increased need for plan awareness and understanding to address a lack of plan contributions.
Reported by Valentina Baez
Eligible employees are increasingly missing out on retirement saving opportunities, largely because they do not understand their workplace plans or how to get started, according to findings from the Ascensus Eligible Not Contributing Employee Survey. According to its findings, released Tuesday, 60% of nonparticipation is driven by a lack of awareness or understanding of plan features.
Nearly one-third of surveyed employees (30%) said they do not know how their plan works or how to begin participating.
“If employees do not understand their plans or how to begin, they rarely take action,” said Nick Good, the Ascensus CEO, in a statement. “Clearer onboarding and enrollment, smarter personalization to encourage savings, and coordinated education with employers all help more individuals move from eligibility to actively saving.”
According to the 2025 PLANSPONSOR Participant Survey produced by PLANADVISER’s sister publication, PLANSPONSOR, employees’ top reason for not participating in their employer’s retirement plan was their need of income for day-to-day expenses (20.3%), followed by a fear of not being able to access their 401(k) savings in an emergency (16.5%).
A majority of nonparticipants surveyed by PLANSPONSOR felt they were living paycheck to paycheck (38.5%), followed by 35.4% who reported their most pressing financial situation as paying rent.
When Ascensus asked nonparticipants what would motivate them to start saving, employees highlighted the need for targeted education and specific plan enhancements. Half of respondents (50%) said that focused efforts to improve understanding would help drive participation. Among those citing plan enhancements as a way to improve enrollment, 13% pointed to employer match offerings and 10% mentioned simplified enrollment processes. Beyond awareness gaps, 23% of nonparticipation stemmed from perceived affordability, according to the survey.
The findings from both surveys align with a broader industry trend. According to PLANSPONSOR’s 2026 DC Survey: Plan Benchmarking, overall defined contribution plan participation declined to 70.5%, down from 76.1% in the 2025 report.
The Ascensus survey was conducted from July 16 through August 15, 2025, and was distributed to more than 186,000 eligible but nonparticipating employees.