Employees' understanding of employer-sponsored retirement plans, a knowledge gap perspective

The retirement benefit community is currently undergoing a paradigm shift as many organizations cast aside traditional defined benefit plans in favor of defined contribution plans. In other words, instead of employers providing defined benefit plans that are risk free to employees, many organizations have decided to offer defined contribution plans in which employees are responsible for both contributing to the plan and making the investment decisions required therein.As employees are required to make decisions that will ultimately determine their financial security during retirement, it is crucial that employers develop materials that will equip all employees with knowledge about retirement-related issues. Therefore, this study examined the range of knowledge about retirement-related issues that exists among various employee groups within a particular organization. Results showed that education serves as a strong predictor in determining employees' knowledge about retirement-related concepts. Based on the study's findings, implications for future research regarding the development of materials designed to educate employees about employer-sponsored retirement plans are discussed.