Employees who participate in both their company’s 401(k) and their company’s employee stock purchase plan tend to contribute an average of 32% more to their 401(k) than those who participate only in the 401(k), according to research released Tuesday by Fidelity Investments.
In addition, 89% of employees who take part in their company’s ESPP also participate in their 401(k).
The research also showed that employees who participate in both plans are likelier to take advantage of financial guidance that their employer makes available, which can contribute to improved overall financial wellness.
The analysis was based on 250,000 employees at 100 Fidelity corporate clients who had access to both a 401(k) and an ESPP as of Dec. 31.
Fidelity’s study found that employees in both plans contributed an average of 12.5% of their salary in their 401(k) and 6.3% in their ESPP, while employees who participate in just their 401(k) contribute an average of 8.8% of their salary.
The higher contribution rate for employees in both plans is consistent across all income levels, not just among executives and highly-paid employees.
For example, employees with annual salaries between $25,000 and $50,000 who participate in both plans contribute an average of 8.3% to their 401(k) and 4.7% to their ESPP, compared with a 7.4% contribution rate for employees who participate only in their 401(k).