Urging employees to participate in retirement savings plans has always been achallenge. However, the findings of a study by researchers of respondents at Dartmouth College, in Hanover, N.H., financed through a grant provided by the National Endowment for Financial Education, show that specific low-cost strategies succeed in boosting employee participation rates.

Researchers Annamaria Lusardi and Punam Anand Keller focused the study on low-income and female employees because, based on their pre-study analysis, those workers appear to have disproportionately low financial literacy levels and low participation in savings and tax-benefit programs.

"We are particularly interested in women and low-income employees because these groups face unique savings challenges," Lusardi says. "Women, for example, live longer than men, and they are normally the caretakers for children or aging parents. To take care of their families, they first have to take care of themselves."

During the 18-month study, a methodology was formulated that involved surveys, focus groups, in-depth interviews, and ethnographic studies of low-income, young, short-tenured and female employees. Lusardi and Keller identified the primary obstacles and developed a tailored, cost-effective program designed to overcome these obstacles and to increase retirement plan participation. The "emerging workplace financial education model" they devised resulted in a 56 percent increase in enrollment within 30 days of new-hire orientation.

The research subjects used for the study "know what they want to accomplish with savings. However, there is a gulf between what people aim for and their perceived ability to get there," Lusardi says. "We hear over and over that people feel they are not sophisticated investors and that they do not know where to start. People are very different and those differences should be taken into account when devising saving initiatives."

Brent Neiser, director of strategic programs and alliances for the National Endowment for Financial Education, says, "Participating in a retirement plan at work is one of the smartest financial moves an employee can make, especially if he or she receives matching employer contributions. Encouraging workers—especially those at risk of insufficient coverage in retirement, like low-income and female employees—is a priority for NEFE."

Though the findings of the study focused on Dartmouth College, they are applicable to other institutions or organizations trying to increase saving and pension participation, the researchers say. The methodology, they say, can serve as a model for any organization challenged to promote action or participation by a particular demographic in any program. Keller believes human resource departments need to design effective, easy-to-comprehend programs to help guide their employees. For example, she recommends low-income workers be offered financial literacy programs, money management seminars, and one-on-one counseling to help overcome debt.

The study, which began in 2008, and the final report provide recommendations for organizations to follow, including new methods of analyzing the needs of employees and low-cost solutions. For more on increasing the effectiveness of retirement savings programs for female and low-income employees, go to www.nefe.org/DartmouthStudy.

Lusardi and Keller's research includes several studies related to building financial capability, and Lusardi recently edited "Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs," a University of Chicago Press book that includes a chapter about the NEFE-funded retirement savings study.

The National Endowment for Financial Education is a nonprofit foundation dedicated to helping all Americans acquire the knowledge and skills necessary to take control of their financial destiny.