A couple of years ago, companies and organizations by the hundreds cut their 401(k) match to save money. They said it was not a permanent cut, but instead something to get through the rough patch.
Yes, so where’s your match now?
Even while some companies are seeing projected earnings and dividends rise, they are slow to restore benefits. Some are saying they don’t want to restore them and then have to cut them again if the recovery goes south. The Wall Street Journal says:
“All told, almost one in five U.S. companies with at least 1,000 workers have reduced or suspended their matching contributions since September 2008. Roughly half have yet to restore those benefits, though many are considering reinstating at least a portion of the match within the next 12 months, according to a survey this spring by employee-benefits consulting firm Towers Watson.
“Smaller companies are especially reluctant. A March survey by Fidelity Investments found that only 36% of employers with 500 or fewer workers had reinstated previously suspended matches or planned to do so in the next 12 months.
“If anything, more cuts may be on the way. One in 10 employers as of February planned to reduce or eliminate matches within the next 12 months, according to a survey by the Society for Human Resource Management released in late June.
“Many employers suspended their matches after the dot-com bust but were quicker to restore them, 401(k) experts say.
” ‘There wasn’t this hesitation we’re seeing now,’ said Pamela Hess, director of retirement research at consulting firm Hewitt Associates. Given the growing worries about the sustainability of the economic recovery, employers don’t want to reinstate a match only to suspend it again next year.”
Employer’s match is not just important to the amount you will have at retirement. Researchers say without a match, many workers just stop participating in retirement plans altogether.
