5 Ways Healthcare Employers Can Increase Retirement Plan Participation
Key takeaways
Automatic enrollment helps improve retirement plan participation by making saving the default rather than requiring employees to take the first step.
Automatic escalation can help employees increase savings gradually without repeated decision-making.
Strict thresholds may delay access for part-time, pro re nata (PRN) or variable-hour workers.
An employer match remains an effective incentive for encouraging employees to contribute.
Personalized, accessible education can build confidence, strengthen engagement and support better retirement decisions.
A retirement plan is only as effective as the number of employees actively participating. For healthcare employers managing complex, shift-based and high-pressure environments, participation is a critical indicator of whether benefits are truly reaching the workforce.
While there is no single formula for improving retirement outcomes, these plan design and engagement strategies can help healthcare employers reduce friction, expand access and encourage more consistent saving:
Automatic enrollment
Automatic escalation
Inclusive eligibility
Employer matching
Financial wellness education
Vanguard’s How America Saves 2025 found that plan design continues to shape retirement outcomes, with features such as automatic enrollment and professionally managed allocations helping participants save more and invest more effectively.
That matters in healthcare, where labor shortages, turnover and demanding work environments can make it harder for employees to prioritize long-term financial planning. Competitive retirement benefits can play a meaningful role in helping organizations attract, engage and retain talent while supporting long-term financial security.
“We understand the critical role retirement plans play in securing financial futures,” said Chris Magno, senior vice president and general manager, ADP Retirement Services. “Participation rates are one of the first things plan sponsors should evaluate. When participation is low, employees may miss opportunities to build financial security, and organizations may face additional administrative or compliance complexity.”
Let your retirement plan design do the heavy lifting
Healthcare employees are focused on delivering care, managing unpredictable schedules and navigating demanding workloads. That makes it easy for retirement planning to take a back seat.
Thoughtful plan design can help remove friction and make saving easier, especially when it reflects how people actually behave, not how we expect them to behave.
“Automated features can help eliminate indecision and help employees build their retirement security,” said Ronald Ulrich, vice president of product consulting, ADP Retirement Services.
Learn how ADP® Retirement Services can help your employees confidently plan for their future.
1. Automatic enrollment
Automatic enrollment places employees into the plan once they become eligible, unless they opt out. For healthcare employers, where time and attention are limited, this shift, from requiring action to enabling action, can have a meaningful impact on participation.
The evidence for automatic enrollment is especially strong. Vanguard reported that automatic enrollment adoption in its defined contribution plans increased from 10% in 2006 to 61% in 2024, and that participation in auto-enrollment plans reached 94%, compared with 64% in voluntary enrollment plans.
“Rather than requiring employees to proactively sign up … auto-enrollment enrolls eligible workers automatically at a predetermined contribution rate,” Ulrich said, adding that making participation the default can strengthen plan health while reducing administrative burden.
Automatic enrollment also aligns with the SECURE 2.0 Act’s direction of travel. New 401(k) and 403(b) plans subject to SECURE 2.0 generally must include automatic enrollment beginning in 2025, with an initial automatic deferral of at least 3% and no more than 10%, plus annual automatic increases.
FAQ: Why does automatic enrollment improve retirement plan participation?
Automatic enrollment improves participation by making saving the default rather than requiring employees to take the first step. In busy healthcare environments, it helps convert intent into action while preserving choice through an opt-out option. Research consistently shows higher participation in plans with automatic enrollment.
2. Automatic escalation
Automatic escalation increases contribution rates gradually over time, helping savings grow alongside income.
Many employees never revisit their initial contribution rate, even as their financial situation evolves. Auto-escalation helps ensure their savings keep pace.
“Auto-escalation solves this by gradually increasing contributions in small, manageable increments that employees barely notice,” Ulrich said. “Over time, these modest annual increases create a sustainable and effective wealth-building strategy.”
The research supports pairing automatic enrollment with escalation. The Employee Benefits Research Institute (EBRI) found that when automatic escalation is added to automatic enrollment with a 6% default contribution rate, the reduction in projected retirement savings shortfall increases from 7% to 9%.
For healthcare employees whose compensation may change through credentials, tenure, promotions, overtime or shift differentials, automatic escalation can help contributions grow without asking employees to make repeated decisions.
FAQ: Should healthcare employers use automatic escalation?
Automatic escalation can help employees increase savings gradually without repeated decision-making. Small annual increases are typically manageable, yet meaningful over time. When paired with automatic enrollment, escalation can improve savings adequacy and support stronger long-term retirement outcomes for healthcare employees.
3. Eligibility requirements
Eligibility requirements can sometimes create unintended barriers to participation.
In healthcare, where organizations rely on part-time staff, pro re nata (PRN) employees, per diem workers and variable schedules, stricter thresholds may delay access to retirement plans for large segments of the workforce.
Revisiting eligibility rules can help expand access and allow more employees to begin saving earlier. Vanguard reported that 76% of plans allowed participants to join immediately in 2024, and 85% of employees qualified for immediate eligibility, suggesting that faster access has become a common plan design practice.
At the same time, participation alone is not enough. Many enrolled employees still may not contribute enough to take full advantage of available benefits, which makes eligibility, contribution strategy and education mutually reinforcing parts of plan health.
FAQ: How do eligibility requirements affect retirement plan participation?
Eligibility requirements determine when employees can begin participating. Strict thresholds may delay access for part-time, PRN or variable-hour workers. Expanding eligibility can increase participation, help more employees begin saving earlier and support a more inclusive benefits strategy.
4. Employer match
An employer match remains an effective incentive for encouraging employees to contribute.
It creates a clear, immediate reason to participate and reinforces the organization’s investment in employees’ long-term financial well-being. Vanguard reported that 96% of plans provided an employer contribution in 2024, and the most common match formula was 50% on the first 6% of pay.
Benefits are increasingly seen as a reflection of how much an employer values its workforce. Recent benefits research found that 401(k) priority rose from 30% in 2018 to 62% in 2024, reflecting employees’ growing focus on long-term financial security.
For healthcare organizations competing for talent, a well-structured match can support both participation and retention. But the match must be easy to understand. If employees do not know how much to contribute to receive the full match, they may leave valuable savings opportunities unused.
FAQ: What retirement plan features help employees save more?
Automatic enrollment, automatic escalation and employer matching work together to improve savings outcomes. Enrollment helps employees start, escalation helps contributions grow over time and matching provides a strong incentive to participate. Together, these features can help create a more effective retirement savings experience.
“It never felt salesy … it really felt like, ‘We have an opportunity here and here’s how we can help,’” said Danielle Bender, benefits coordinator, Wooster Community Hospital.
5. Employee education and personalized financial wellness
Even the best-designed plan can fall short if employees do not understand it.
Financial stress is a reality for many workers, with competing priorities such as everyday expenses, debt, healthcare costs and long-term savings affecting their ability to plan for retirement. ADP financial wellness research found that 39% of employees feel overwhelmed and fearful about their personal financial situation, with top concerns including living expenses, retirement savings and healthcare costs.
“Financial wellness is not just about having a steady paycheck,” Magno said. “For today’s workers, it’s also about their ability to save for retirement, manage debt and maintain financial security with confidence.”
For healthcare employers, effective education must meet employees where they are —across roles, shifts and locations — with guidance that is simple, accessible and relevant. The strongest education strategies aren’t generic; they’re personalized, timely and supported by tools that help employees understand savings goals, manage everyday financial challenges and take the next best action.
Financial wellness programs can include personalized journeys, digital tools, calculators, online assessments and automatic savings features that help employees build healthier financial habits.
FAQ: Why is financial wellness education important for healthcare employees?
Financial wellness education helps employees connect everyday financial decisions to long-term retirement goals. When employees feel overwhelmed or uncertain, they may be less likely to prioritize saving. Personalized, accessible education can build confidence, improve engagement and support better retirement decisions.
What else should healthcare employers consider?
The five strategies above are strong starting points, but participation is only one measure of plan health. Healthcare employers looking to go further should also evaluate default contribution rates, default investment design, targeted communications and strategies to reduce savings outflow.
Review default contribution rates
Automatic enrollment works best when the default contribution rate is set thoughtfully. SECURE 2.0 requires many new plans to use an initial automatic deferral of at least 3% and no more than 10%, with annual increases, but employers may want to evaluate whether their default rate supports meaningful savings while preserving employee choice.
EBRI found that automatic enrollment with a 6% default contribution rate reduced projected retirement savings shortfall by 7%, and that adding automatic escalation increased the reduction to 9%.
Don’t overlook default investments
Employees who are automatically enrolled may not make active investment elections, so default investment design matters. The Department of Labor (DOL) notes that qualified default investment alternatives (QDIAs) can include target-date investments, managed accounts and balanced funds.
Vanguard reported that 67% of participants were in a professionally managed allocation in 2024, underscoring the growing role of managed default investment approaches in participant outcomes.
Use targeted communications
Healthcare employees do not all engage with benefits information in the same way. Personalized communications, mobile-friendly education and timely nudges can help employees understand their options and take action, especially across varied shifts, worksites and employee types.
Financial wellness resources that include personalized journeys, tools, calculators and online assessments can help employees make more informed savings decisions.
Reduce outflow where possible
Participation and contribution rates are important, but so is preserving savings over time. EBRI found that when automatic enrollment with a 6% default contribution rate, automatic escalation and automatic portability are adopted together, projected retirement savings shortfall falls by 16% overall and by 26% for workers ages 35-39.
This may be especially relevant for employers with turnover, distributed locations or employees moving between roles or organizations, where small balances and job transitions can increase the risk of savings outflow.
A retirement plan built for healthcare employers
Increasing participation is only part of the equation. Sustaining it requires thoughtful plan design, consistent communication and the ability to support a diverse, evolving workforce.
In healthcare, that also means delivering an experience grounded in trust, clarity and reliability.
When retirement plans are easy to understand, accessible to more employees and supported by meaningful education, participation can grow, and with it, employees’ confidence in their financial futures.
Learn how ADP® Retirement Services can help your employees confidently plan for their future.
FAQ
How can healthcare employers increase retirement plan participation?
Healthcare employers can increase participation by simplifying enrollment, expanding eligibility and encouraging consistent contributions. Automatic features, employer matching and personalized financial wellness education can reduce barriers and support employees across diverse clinical, administrative, part-time and variable-hour roles.
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