Join The NonProfit Times: or Become a member

Subscribe: Print Publication or Newsletter

Stay connected.
Stay informed.

Employees Aren’t Grabbing Access To Retirement Plans

By Zach Halper - June 24, 2013

Even as more nonprofits are offering retirement plans to their employees, participation rates remain relatively low. But at the same time, studies show nonprofit employees are worried about their retirement nest egg.

According to three-year trending data from The NonProfit Times and Bluewater Nonprofit Solution’s annual Nonprofit Organizations Salary and Benefits Reports,

401(k)s and 403(b)s are the two most popular types of retirement plans that employers offer their employees.

While participation numbers are consistent, they are less than you might expect. Participation rates for 403(b)s during 2010, 2011 and 2012 were 58.15 percent, 66.59 percent, and 60.52 percent respectively. For 401(k)s the rates were 67.42 percent, 67.97 percent and 66.09 percent respectively.

While there was no data that explained how organizations enrolled their employees, the numbers suggest that many of them did not auto-enroll. Participation rates are between 60 and 90 percent when auto-enroll is used, according to benefits experts.

Julie Gallion, senior human resources consultant at Nonprofit HR Solutions in Washington, D.C., noted that most organizations choose 403(b)s instead of 401(k)s since they are specific to nonprofits. Prior to 2009, they did not have to be monitored or managed by their plan sponsors, and did not have any of the other regulations such as 401(k)s.

The plans that were specifically asked about by The NonProfit Times for the purposes of the study were 401(k)s and 403(b)s. Over three years – 2010, 2011, and 2012 – the nonprofits that offered these types of plans and the number of employees participating remained relatively consistent. It is curious more don’t sign up. As Gallion explained, it’s not that they don’t want to do it. “They’re scared of it and it doesn’t affect them now,” said Gallion. “A lot of these employees are young so they aren’t even thinking of retirement now.”

People’s main priority these days “is to pay their bills,” said Christine Sivak, a partner at Cedar Book Financial Partners, LLC, in Cleveland, Ohio. “Retirement is way down on the list for most workers now.”

Gallion said that when she explained to her clients the money they would end up getting for the retirement if they enrolled immediately rather than waiting, it “shocked” them into action.

Sivak said in her studies, she found that only “9 percent of employees are financially literate. It’s hard to take it upon themselves to sign up for a plan,” she explained. That’s why she believes most employers should consider auto-enrollment. When asked why she thought some still preferred to keep it in the hands of their employees, she chalked it up to a misreading of the situation.

“Sometimes there’s a misconception between what executives think employees want and what they actually want,” she explained. “Some employers think auto-enrollment is taking too much control.” Sivak said that 70 percent of employees want to be auto-enrolled into retirement plans, citing data from the Employee Benefits Research Institute in Washington, D.C.

A study by advocacy organization Independent Sector in Washington, D.C., backs up the notion that there is great frustration among nonprofit employees about their retirement plans. According to its study, “Financial Security and Careers in the Nonprofit and Philanthropic Sector,” while many workers have access to some type of retirement plan, 45 percent of them are not satisfied with their ability to prepare financially to retire. Those in the late-stages of their career (age 50+) are more likely to feel some satisfaction (around 63 percent), while those in the early- and mid-stages (21-34; 35-39) have the least amount of confidence (49 percent and 48 percent, respectively).

That same study indicated that workers are not sure how much they need to save for retirement. Most employees are saving some money, but only 18 percent are very or extremely confident that they are saving the right amount. On the other hand, 42 percent are not too or not at all confident about their savings. Much like satisfaction with retirement plans, late-stage career workers are slightly more confident about savings but even so, over one-third (38 percent) are not confident.

Another key data point from The NonProfit Times’ research was related to organizational contributions to both 401(k)s and 403(b)s. The 401(k)s peaked at 7.72 percent in 2011, bottoming out at 7.38 percent in 2012. The number was for 2010 was 7.53 percent. Contributions for 403(b)s reached a high of 8.35 percent in 2010, but fell to 6.73 percent in 2011. The rate recovered slightly in 2012 at 7.19 percent.


Sponsored Podcasts

Welcome to the Raise & Engage podcast, a filters-off series for nonprofit professionals hosted by Blackbaud's straight-shooting expert Danielle Johnson Vermenton. During this open-mic session, you’ll hear honest advice to help YOU do more for your cause.

Episode 6: The Power of ‘No’ at Work|| daniellejohnson-76

You have a job description, but on any given day, you're probably doing dozens of things outside the scope of that description. Combine that with the challenge of a fast-paced environment and the shifting priorities of funders, colleagues, and board members and it’s easy to fall short of doing your best. By being mindful of your limitations and capacity—and saying “no” when your plate is full—you can actually do more for your cause. In the sixth installment of the Raise and Engage podcast Danielle Johnson and Robin Anderson discuss the power of saying “no” at work.

Episode 5: Professional Development: Getting Un-Stuck|| daniellejohnson-76

In the most recent episode of Raise + Engage, Danielle is back with Brian Reich from little m media to discuss how nonprofit professionals can stay motivated and energized in their day-to-day roles. Brian shares his experience working with nonprofits and the lessons and tips he's learn from and shared with them over the years, including tips for avoiding a professional rut, creating forward momentum in your career and pushing yourself outside of your comfort zone. If you're considering making a career move or want to ensure you're on the right path, you won't want to miss this inspo-packed episode!

Episode 4: Apps and Hacks to Stay (Mostly) Sane || daniellejohnson-76

Episode 4: Apps and Hacks to Stay (Mostly) Sane, is all about tips, tricks and tools for sanity. Blackbaud’s own interactive product marketer, Julia Lenz, joins host Danielle Johnson to share some high tech. (and no tech.) productivity tips to help nonprofit professionals stay sane in the crazy world of philanthropy.

Tune in to hear:

  • Tips for how to spend the first 30 minutes of your day
  • The benefits of 15 minute meetings
  • Why notebooks are still relevant to a successful organization
  • Ideas for better managing your inbox
  • Why you should take lunch outside the box
  • ...and much more!
Don’t forget to visit the #NoFilterNonprofit Hub afterwards to download our newest tip sheet10 Productivity Hacks for Nonprofits.

Episode 3: Tech. Connection: Solutions, Strategy, and Staff || daniellejohnson-76

Episode 3: Tech. Connection: Solutions, Strategy, and Staff In episode 3 of the Raise + Engage podcast, Danielle Johnson is joined by Chris Geady and William DaSilva, two IT experts in the nonprofit space, to talk technology integration for NPOs: when you need it, when you don’t, and how to do it successfully.

Tune in to hear:

  • When to say NO to integration
  • How to set your strategic plan before even looking at technologies
  • Ways to get your entire team on board
  • The importance of identifying a project lead
  • The RFP process - how it should and should not go
And William shares a story about a nonprofit that may or may not have still been using a typewriter. You don't want to miss this one!

Episode 2: From Socially Awkward to Socially Awesome! || daniellejohnson-76

According to Danielle Johnson, straight-shooting host of the Raise + Engage podcast series, if your staff members aren’t the number one advocates for your cause on social media, you’re failing. In the most recent episode, Danielle is joined by Blackbaud’s own social media guru Madeline Turner to discuss overcoming social struggles and creating a social ambassador program at your organization. This entertaining and insightful duo dishes on the importance of making your social media presence human, making the case for a formal social program to leadership, how University of Michigan turned a one time social media campaign into a long term social program, and how Madeline's mom unknowingly became a social ambassador on #GivingTuesday.

Episode 1: Corporate Culture & Development: Shake It Up! || daniellejohnson-76

In the premiere episode of Raise & Engage, Danielle is joined by three straight-shooting nonprofit rock-stars: Jodi Smith of Sanford Health Systems, Veronica Brown of Chicago Public Library Foundation and Ali Burke of Southlake Regional Health Centre Foundation. The group talks organizational culture, problem employees, why its important to celebrate and how to shake things up this year and build a better more authentic team that gets stuff done!


Stay informed, catch latest trends in the nonprofit space.

Subscribe to Our Free Newsletter

No obligation, unsubscribe at anytime.

Success! Check your email inbox.

Follow Us On Twitter

NPT 2016 Buyers' Guide

Newsletter Sign-up

click here to return to the previous page