How Plan Sponsors Are Working to Close the Gender Savings Gap

Plan sponsors are bolstering the amount of attention and effort paid to benefits’ gender equity, focusing on more equitable access to benefits across retirement, health and financial wellness.

Four plan sponsors operating in distinct businesses—discerning that, historically, women have lived longer and saved less, due to lower earnings and a higher rate of leaving the workforce for caregiving responsibilities, than men—regularly review their benefits offerings and implement plan design changes. With an eye toward boosting equitable access to benefits, they have adjusted employee compensation, added mental health benefits, used targeted communications and maintained affordable employee medical care for workers.

These progressive plan sponsors have used analysis of their plan demographics to grasp the needs of their workforces.

“The whole idea is to help [workers] feel more financially ready, and then, when they feel more secure in their finances and what they’re doing, then maybe they can feel more secure in setting money aside in retirement,” says Angela Garcia, a senior manager of retirement at the Baylor College of Medicine in Houston. “Whereas when I first started in retirement years ago, the biggest concern was, ‘OK, give people education on investments,’ and that was pretty much all you did.”

Mining plan data has helped plan sponsors discern that every employee benefit offered affects another, because retirement contributions, medical bills, credit card debt, student loan debt repayments and wellness programming all, ultimately, are financial concerns.

“If an employer provides a financial wellness solution that includes some kind of data loop that brings back to the employer [and] the vendor anonymized information about their population that gives them an insight as to what’s most important—what are their biggest concerns, priorities, as well as how do they process financial information [and] where are their anxieties?—that empowers and allows the employer to be much more specific and targeted in their solutions,” explains Jonathan Price, the national retirement practice leader at benefits and human resources consultant Segal.

Although several of the plan sponsors interviewed have focused more attention on boosting equitable benefits across gender, persistent disparities have remained in retirement plan access and savings. Recent research from the Pension Research Council found that 48% of men reported having a retirement account, compared with 43% of women.

Why Equitable Access Makes Sense

Plan sponsors say equitable access to benefits is just good business.

Diverse workforces and greater equitability, including more access to retirement, health and wellness and mental health benefits, improve the long-term viability of businesses, explains Mark Smrecek, the financial well-being market leader at WTW.

“Apart from benevolence, there’s a very, very strong tie to business in several key areas, the first of which is from a talent point of view, having equitable access to benefits means that you’re able to attract and retain the right employees, regardless of their cohort,” he says. “This has been a key issue over the past several years, where making sure that organizations are not only equipped to do exactly what they’re intended, but to be best in market and the ability to … attract and retain women in the workforce, men in the workforce, and all sorts of other affected communities in this space is absolutely critical from a talent perspective.”

Greater workforce diversity, equity and inclusion will extend to the entire workforce and company overall, adds Thea Ammon, a senior benefits administrator at OneAZ Credit Union.

“It’s important to have a diverse workforce, period,” she says. “The more different backgrounds [in the workplace] … it’s better for everyone.”

Lucas Hellmer, director of compensation and benefits at engineering firm Salas O’Brien, explains that financially stressed employees are less productive and tend to be shorter tenured.

“Work bleeding into your personal life can also have some negative consequences as well, [because] those people may not be successful with your organization and may ultimately leave [because of] something that may be preventable,” explains Hellmer. “It’s all about retention: It’s not always about profit and loss. … It’s [also] doing the right thing for team members.”

Plan sponsors are plotting to boost retention and reap the rewards of more equitable access to benefits, bolstering pay and benefits for employees while adding benefits including mental health programming.

Boosting Pay

Progressive plan sponsors have a greater understanding that for participants, developing optimal financial behavior for retirement requires solid financial behavior. Retirement is a financial issue, and financial concerns affect retirement planning and employees’ retirement security.

In 2022, “OneAZ made a proactive decision to adjust all wages to salary midpoints,” explains Ammon. “All like positions would be paid the same, regardless of tenure. Of course, anyone above midpoint remained at this wage status.”

The change was intended to drive equitable access to retirement and other benefits.

“While this provided a variety of different positive outcomes [reducing turnover, aiding in talent acquisition and addressing wage compression], it also level-set everyone with transparency,” explains Ammon. “With our [Diversity Equity Inclusion and Belonging] initiatives, the transparency allowed reassurances of equitable pay.”

Boosting Benefits

OneAZ has used automatic features in its plan designs—including auto-enrollment and auto-escalation—and has also used qualified default investment alternative funds, shortened vesting and adjusting the employer match formula for more equity across gender, as well. Previously, the plan used six-year cliff vesting, explains Ammon.  

Another plan sponsor, Salas O’Brien, this year added paid parental leave for both men and women, mental health support and access to the stress management platform Headspace, says Hellmer.

ASM Research plans to add mental health programming to its roster of available benefits in 2024, explains Tammy Lassiter, a senior retirement plan administrator at the Fairfax, Virginia-based plan sponsor.  

“That’s happening because we want people to have more access to mental health providers,” Lassiter says.

The plan sponsor is also making a plan design change next year—reducing from two to one the number of loans an employee can take—supporting participants’ best interests in the long term, according to Lassiter.

Every Benefit Is Financial

At OneAZ, the plan sponsor’s efforts at boosting equitable access to benefits are focused on tying together health and wellness benefits. Providing affordable medical care, wellness and mental health benefits will ultimately drive retirement plan participation and employees to contribute greater amounts for retirement.

Driving more equitable access to benefits is “making sure that everything is affordable,” says Ammon.

The Phoenix-based credit union’s workforce population consists of 62% women, which means “pregnancy is our leading expense, but when you make [medical care] affordable, then the person is less likely to have to dip into that 401(k) for those medical expenses,” Ammon adds. “It’s hard to drive 401(k) participation if you have something else that’s interfering with that, so it’s really looking at: What are those obstacles?”

Conversations about medical care and retaining affordable benefits can start the process to change other areas of benefits and compensation, she adds.

“Associates are not focused on ‘Oh, I have to pay this medical expense, I have to pay my student loans, I want to work out but I have to pay for the gym: Do I pay for the gym or do I save the money?’” Ammon explains. “So if you’re reducing those financial barriers to the rest of [their] life, then the individual has more room to save.”

Closing the Gendered Retirement Savings Gap

Recently, ASM Research added an education strategist from retirement and income solutions at Principal to the plan, Lassiter says.

The specialist reviewed and analyzed the plan, revealing that women participants were saving less for retirement than men.  

“It’s not a huge gap, but it is definitely a gap, when you see [in] every single chart, the women are saving less,” explains Lassiter. “Then we’re wondering, ‘OK, what should we do about it?’”

Driving down that retirement savings gap is now a plan goal, she says.

“I’m going to send out a couple of targeted communications pieces to just the female population—so they understand what we already have to offer—[that] talk about the importance of budgeting and emergency savings and … try to get them to schedule a one-on-one meeting with a financial planner, which we offer,” Lassiter says.

Lassiter is considering forming affinity groups of women and holding education sessions in which women can become more engaged with money and finances.

“[A] focus group would be a good idea, because as a woman, I might understand some of the things that they’re going through and why they’re not saving, but I shouldn’t be assuming what those are, because everyone’s situation is different,” Lassiter adds. “That’s my strategy that I have not yet implemented, that I plan to do and try to get some kind of cross section of people … to talk to [employees] about, ‘What can we do from our side?’ or ‘What can we provide to them that would help them save more money for retirement?’”