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Empower Examines Savings Behavior of Government Workers Revealing Compelling Insights
[May 05, 2022]

Empower Examines Savings Behavior of Government Workers Revealing Compelling Insights


The pandemic and economic uncertainty has created challenges for state and local government employees who say saving for retirement is a top financial priority for 2022.

Government employees saving in Empower's workplace retirement plans steadily increased savings rates during the pandemic compared to two years ago and more government employees contributed to those plans. An analysis of the savings behavior of 1.55 million active state and local defined contribution (DC) participants with Empower as the recordkeeper provides a comprehensive view of state and local government employees' DC savings behavior and retirement preparedness. The analysis also shows the value of how a DC plan can fill retirement income gaps.2

Most public sector workers are primarily covered by defined benefit (DB) plans, with DC plans taking on the role of supplemental retirement plans for this segment. Fiscal challenges have forced many state and local governments to reduce pension plan benefits and payouts, and many public sector workers are not covered by Social Security. These factors unveil the importance of DC plans in closing retirement income gaps. However, research has found that public sector employees may need help optimizing their DC plan participation and engagement to improve their retirement readiness.3

"Government workers are the backbone of our communities and our country," said Dan Morrison, senior vice president government market. "It's critical that both state and local government workers understand their future expected retirement income as their pension plans may not fully meet their needs in retirement. This will help them begin to plan appropriately and to fill any gaps along the way."

The Empower analysis Empowering America's Financial Journey™, explores how this segment of American workers are:

  • Remaining resilient during the pandemic and uncertain economic conditions. They are saving an average of 6.4% of their salary in their workplace retirement plan, up from 5.9% two years ago.
  • Utilizing professional management and when offered, four in 10 government participants utilize a Target Date Fund (TDF), with usage levels steadily declining across generations. Overall, 1 in 6 government participants utilize managed accounts. Compared to TDF users, participants using managed accounts have higher engagement, savings and usage rates for advisory services provided through Empower's Advised Assets Group (AAG). 3
  • Improving outcomes when engaging with their retirement planning. Engaged participants are savings at almost twice the rate of unengaged participants (8.2% vs. 4.2%). Savings rates climb even higher to 9.9% for participants engaging with Empower's AAG-registered investment adviser representatives. 4
  • Reaching age 50, and this is serving as a psychological trigger regarding retirement savings. Average saving rates increase for all participants, but they are significantly more pronounced for engaged participants. Several factors can help explain this, including the proximity to retirement, eligibility for catch-up contributions or an increase in disposable income due to te life stage.
  • Saving less. Female government participants are saving 15% less than men (6.0% vs. 6.9%). The difference in gender saving rates is narrower in the corporate DC market (8% vs. 8.5%) and women outpace men's saving rates at income levels greater than $60,000 in for profit plans.



"Even with competing priorities, government employees have steadily increased their savings during the pandemic. They have ranked saving for retirement as a top priority, and we are seeing that engaged participants are saving significantly more than unengaged participants," said Claudia Step, senior vice president and chief customer experience officer.

Empower is the nation's second-largest retirement plan recordkeeper by total participants.5 Through this study, Empower aimed to gain a deeper understanding how participants behave and what drives that behavior and, as a result, what insights and learnings can help American workers on their journey to a secure retirement.


"We encourage all workers to get on the right track early; however, it's never too late to begin saving. This is especially important for the new workforce of Gen Zers who have time on their side and can benefit from higher engagement and savings rates," said Luis Fleites, director of Thought Leadership at Empower.

Click here to read the entire study, Empowering America's Financial Journey.™.

About Empower

Headquartered in metro Denver, Empower administers approximately $1.4 trillion in assets for more than 17 million retirement plan participants and is the nation's second-largest retirement plan recordkeeper by total participants.5 Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans; small, mid-size and large corporate 401(k) clients; nonprofit 403 (b) entities; private-label recordkeeping clients; and IRA customers. Personal Capital, a subsidiary of Empower, is an industry-leading hybrid wealth manager. For more information please visit empower.com and connect with us on Facebook, Twitter, LinkedIn and Instagram.

1 Bureau of Labor Statistics, Current Employment Statistics Highlights, February 2022.

2 Empower analyzed 1.55 million active participants in state and local government defined contribution plans. The analysis is an aggregate view of public DC plans including various plan types - such as 403(b), 457, 401(a) and 401(k) - that are available to different public employee segments.

3 Online advice and the managed account service are part of the Empower Retirement Advisory Services suite of services offered by Advised Assets Group, LLC, a registered investment adviser.

4 Engagement is defined as at least one interaction during a calendar year through participant website, mobile apps, call center or the Empower Retirement Solutions Group and Retirement Plan Advisors, serviced by registered investment adviser representatives.

5 Pension & Investments 2020 Defined Contribution Survey Ranking as of April 2021.

6 As of April 1, 2022. Information refers to all retirement business of Great-West Life & Annuity Insurance Company (GWLA) and its subsidiaries, including Empower Retirement, LLC; Great-West Life & Annuity Insurance Company of New York (GWLANY); and Prudential Retirement Insurance & Annuity Company (PRIAC), marketed under the Empower brand. Assets represents the estimated consolidated pro forma assets under administration (AUA) of Empower and the full-service retirement business of Prudential Financial, Inc., as of December 31, 2021. AUA is a non-GAAP measure and does not reflect the financial stability or strength of a company. As of December 31, 2021, GWLA's statutory assets total $75.9B and liabilities total $73.0B, GWLANY's statutory assets total $4.1B and liabilities total $3.9B, and PRIAC's statutory assets total $100.329B and liabilities total $98.793B.

Securities, when presented, are offered and/or distributed by GWFS Equities, Inc., Member FINRA/SIPC. GWFS is an affiliate of Empower Retirement, LLC; Great-West Funds, Inc.; and registered investment adviser, Advised Assets Group, LLC. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice.

Empower Retirement refers to the products and services offered by GWLA and its subsidiaries, including Empower Retirement, LLC. Empower Retirement is not affiliated with Prudential or its affiliates. All product names, logos and brands are property of their respective owners. "EMPOWER," "EMPOWER RETIREMENT," and all associated logos and product names are trademarks of GWLA. Prudential and all associated logos are registered trademarks owned by The Prudential Insurance Company of America and are used under license.


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