The Implications of Participant Diversity

Understanding what benefits different employee groups value can help a plan sponsor best tailor its offerings.

Plan sponsors and their retirement plan committee regularly review the company’s employee benefits offerings, to determine whether the suite of employer-paid and voluntary benefits is competitive and whether it meets the needs of their workers.

It may seem simpler to consider those participants as a single, unified group, but, in reality, participants’ needs vary by age cohort, career level and other factors. The diversity of needs across a plan’s participants is important to understand and consider. Proper evaluation will help ensure that employers maximize their benefit spend and employees have access to benefits that serve their needs.

Data from PLANSPONSOR’s annual Participant Survey reveal the diversity that can be present within a single employer’s participant group. The 2024 Participant Survey reveals that respondents may be evenly split on certain topics such as their preference for receiving bonuses in cash vs. as retirement plan contributions. On other trade-offs, such as interest in guaranteed lower investment returns compared with riskier but potentially higher returns, responses are less balanced. The lower-risk, more guaranteed return option was preferred by nearly two-thirds of those surveyed this year.

A company’s employees can be divided into multiple subgroups, each with different needs, preferences and expectations. Recognizing and responding to this diversity becomes important for employers seeking to enhance their employee benefits programs. By breaking the whole into various parts, the employer can go beyond the one-size-fits-all approach and instead create messaging, communications and/or benefit offerings that appeal to a specific demographic group. A targeted approach may improve the connection between the benefits provided and the individualized needs of employees.

This strategy may be particularly helpful at a time when the workforce comprises four generational cohorts, often characterized by cultural and lifestyle differences. Generation Z, which represents a growing share of the workforce, may prioritize flexibility and professional development opportunities; Millennials and Generation X, the largest cohorts, might value health care benefits, retirement plans and student loan debt repayment; and Baby Boomers, the smallest cohort and the closest to retirement, may have different priorities depending on how soon they plan to retire and the degree of their workforce participation. By leveraging insights about employee priorities, a company can create diverse benefits packages, thereby encouraging employees to value—and stay longer at—the company.

To gain insight into the drivers behind employee retirement plan decisionmaking, the PLANSPONSOR Participant Survey, now in its 11th year, delves into participant behaviors and preferences to see how attitudes have evolved since 2023.

—Amy Resnick