Gen Z leads in retirement contributions, but benefits education lags

Three out of every four employees lack understanding about their company’s benefits and that is likely to translate into lower participation as open enrollment season rolls around. According to research from benefit automation company Payroll Integrations, employees who feel educated about company benefits are three times more likely to opt in to certain benefits than those who don’t feel educated. 

In particular, employees with high levels of benefits education are three times more likely to opt in for health savings accounts, flexible spending accounts and financial education and planning. In addition, 70% of benefit-educated employees participate in retirement, while only 52% of those who don’t feel educated participate.

All generations have similar feelings about their level of benefit education. millennials felt the most educated with 31% saying they feel completely educated about company benefits. Twenty-six percent of Gen X, 25% of baby boomers and 24% of Gen Z workers felt highly educated about their benefits options. 

Thirty-six percent of Gen Z workers are investing in their retirement plan while 71% of millennials, 74% of Gen X and 59% of boomers contribute to retirement plans. Gen Z employees participate the least in retirement benefits, but those who do participate contribute the most of all generations, the report found. Half of Gen Z workers contribute 11% or more of their salary to their employer-sponsored retirement plan compared with 37% of millennials, 41% of Gen X and 32% of boomers. Lower participation may be due to lack of benefits education early in their careers, while higher contributions could be the result of having more disposable income than those in other generations. 

The lack of benefits education could be related to HR personnel focusing disproportionately on admin work, which is diverting time from employees, including on education, the report suggested. HR managers say they spend 12 hours per week on payroll and benefits-related tasks, and 27% say they spend 20 hours or more on these tasks. 

Related: Most benefits communication and education efforts fall short, employees say

“Many HR teams are dependent on the same manual tasks and processes that they’ve been using for decades – which means hours of unnecessary administrative work to onboard employees, manage payroll and benefits, make employer contributions, ensure adherence to regulations and more,” said Doug Sabella, CEO and co-founder of Payroll Integrations. “This repetitive, time-consuming work not only puts a strain on HR teams, but impacts employees because there’s little time left for teams to spend on higher-level, more strategic HR tasks like educating employees on what benefits they have, why they’re important and how to maximize their value.”