Employers are becoming more generous with their retirement plan benefits, according to Willis Towers Watson’s 2024 U.S. Defined Contribution Survey.

While the median employer contribution to defined contribution plans remained at 7.1% of pay, the gap in overall retirement benefits offered by the most and least generous employers narrowed significantly between 2000 and 2020, the survey found.

In 2020, the most generous employers — those in the 90th percentile — provided retirement benefits that were 10.9% of pay, whereas the least generous — those in the 10 percentile — provided benefits that were 3.5% of pay, a gap of 7.4 percentage points. In 2000, the gap between the most and least generous employers was 11.4 percentage points.

WTW defined retirement benefits as the combined value of an employer’s defined contribution, defined benefit and post-retirement medical and active healthcare plans.

WTW expects the gap in overall retirement benefits to continue to narrow as organizations look to differentiate their defined contribution retirement savings plans.

More than 1 in 10 employers (12%) plan to increase their DC plan contributions over the next two years, with those planning to increase skewing toward those with lower contribution levels, WTW said.

The survey also found that 42% of plan sponsors offer — or are considering offering — student loan matching as part of their workplace retirement savings plans. More than 1 in 3 (35%) offer or are considering offering in-plan emergency savings. Another 26% offer or are looking into in-plan annuity options.

The moves were prompted by a desire to enhance flexibility around employees’ financial needs, according to the survey.

The survey was conducted in July and is based on responses from 483 U.S. defined contribution plan sponsors.

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