Embedding Empathy into Retirement Plans

Retirement plans have undergone significant changes over the last 20 years as the opportunity to make tax-advantaged contributions has improved and the need to save for one’s own retirement has become more essential. For executives involved in shaping employee benefits, the conversation around retirement plan design is evolving. Retirement plans have traditionally been viewed through the lens of regulation, risk and return. But in today’s workplace it’s about human outcomes. Retirement plans present a key opportunity for organizations to show employees they are seen, heard, and valued. Leading organizations recognize that empathy is both a moral virtue and a strategic asset in building plans that resonate across diverse employee populations. The plan design can reflect organizational values, leadership philosophy and long-term vision. Retirement plan sponsors who take a holistic view understand that their workforce’s financial security impacts performance, culture and retention.

Meeting Employees Where They Are

Empathetic retirement plan design starts with a mindset shift that acknowledges employees bring different life experiences, financial challenges and retirement goals to the table. For plan sponsors, this means crafting plans that support real-life scenarios without compromising operational or fiduciary standards. A 25-year-old employee navigating student debt has different priorities than a 60-year-old preparing for retirement.

Features like automatic enrollment and auto-escalation remain powerful tools to increase participation and savings, while also providing opt-out options that respect personal choice. These features are particularly valuable in reaching younger or under-engaged participants without adding significant administrative complexity. From an empathetic standpoint, they also reduce decision fatigue, eliminate unnecessary barriers and support those who may lack financial confidence. That’s empathy operationalized.

Self-Certification of Hardships: A New Provision to Adopt

One of the most impactful regulation changes in recent retirement plan policy is the IRS’s allowance for Self-Certification of Hardship Withdrawals. Starting in 2025, the process for participants facing acute financial emergencies has been simplified by removing the need to provide extensive and potentially sensitive documentation. Plan fiduciaries who adopt the self-certification policies are no longer liable for verifying the legitimacy of the hardship, unless they have knowledge to the contrary. The change allows the employer to provide a practical and compassionate lifeline to the employee by allowing participants to access funds in urgent situations.

Early adoption shows that plan sponsors are eager to be relieved of the burden of determining the legitimacy of employees’ hardship claims, especially when the employee is in a moment of vulnerability. The employer retains the right to restrict hardships to only employee’s personal deferrals; limiting the hardship sources helps to preserve a portion of the employee’s account balance for retirement. The change is a subtle but powerful way to build trust and demonstrate respect for employees and their life circumstances.

Flexibility Without Friction

A well-designed retirement plan must accommodate financial disruption. Allowing flexible employee contribution rate changes enables participants to adjust their deferral rate according to their cash flow needs, while maintaining long-term savings momentum. This flexibility acknowledges that financial realities fluctuate; employees may be navigating debt, caring for aging parents, or recovering from personal setbacks. When plans allow participants to modulate their savings rates, take a plan loan or a distribution without penalty or judgment, they create space for real life. According to data in the T. Rowe Price Reference Point Report, there has been an increase in the 401(k) loan utilization and loan amounts distributed by participants from 2023 to 2024.

On the flip side, also starting in 2025, a “super catch-up” contribution for participants aged 60 to 63 can be elected as a design provision. It allows for increased savings by those nearing retirement, in part because many Americans have inadequate retirement savings and need a little boost. These optional provisions demonstrate an understanding of the competing cashflow and retirement savings priorities employees face.

Clear, Compassionate Communication

Retirement savings can feel abstract or intimidating for many individuals because they are not confident in their financial literacy. Empathetic communication simplifies complex concepts and delivers messages in clear and personalized formats. It is said that a benefit is only realized when it’s understood. At Greenleaf Trust, we are continuing to enhance our participant experience through multiple communication channels and approaches. We aim to provide understandable and effective communication that empowers people to make informed decisions and feel confident in their financial futures. We want all employees to be able to retire with dignity.

Financial wellness tools with interactive retirement projections can help participants visualize their future and take informed action. These tools not only improve participant outcomes, but they also reinforce the sponsor’s reputation as a thoughtful and progressive employer. Greenleaf Trust provides retirement plan participants access to Savology, an interactive financial wellness tool that provides financial planning and financial literacy resources. At no additional charge, the program aims to help people take control of their financial future and improve their overall well-being.

Accommodative Plan Features

Empathy requires business leaders to reconsider who their plans are built for. Are part-time workers excluded from participation? Are phased retirement distribution options available for those who wish to stay engaged longer? Do plan features reflect a multigenerational workforce with different definitions of financial wellness? An accommodative approach considers employees at all life stages—part-time workers, new entrants or those nearing retirement who may need catch-up strategies or phased retirement options. Thoughtful design helps ensure no one group is left behind, and it provides strategic risk management in an economy where talent is increasingly transient and the employees’ expectations are rising.

Building a Culture of Care

Ultimately, embedding empathy into a company’s retirement plan design can help cultivate a culture of care. When employees feel that their long-term wellbeing is a true priority, trust grows, engagement deepens, and their organizational loyalty strengthens. The retirement plan can be designed to be compliant and compassionate. It can help to shape the values your organization stands for while helping to put employees on a path to retiring with dignity.

In conclusion, empathy is no longer a soft skill relegated to interpersonal interactions in today’s evolving workplaces. Empathy is becoming a strategic pillar in organizational planning, especially in the design of employee benefits. Empathetic retirement plan design goes beyond compliance and cost efficiency; it acknowledges the diverse financial realities and emotional experiences of a multigenerational workforce. Every employee brings a unique financial background and life stage to the table. Empathy in retirement plan design means recognizing financial volatility as a reality that many individuals face and providing flexibility in the contributions and distribution provisions as a response. A thoughtfully constructed retirement plan that balances fiduciary responsibility with a more holistic view of the employees can demonstrate empathetic leadership to its employees and shareholders.