The vast majority of U.S. employers that suspended their 401(k) plan matching contributions in the wake of the 2008-09 recession and subsequent tepid recovery have since restored them, according to an analysis by consultancy Towers Watson.
The suspensions mainly occurred from January 2008 through January 2010, though most (83 percent) occurred during the first half of 2009.
According to the analysis:
• 75 percent of U.S. employers that suspended their 401(k) matching contributions have now restored them.
• Among those employers that restored matching contributions, about three in four (74 percent) reinstated them to their previous level, while 23 percent restored them at a lower rate and just 3 percent increased them to a higher rate.
• The median duration for match suspensions was 12 months.
• The most frequent employer match formula before and after the suspension matched 50 percent of employees' salary deferrals, up to 6 percent of pay.
“Many employers are making it a priority to contribute to their workers’ retirement accounts,” said Robyn Credico, a senior retirement consultant at Towers Watson. “Employers understand the importance of helping and encouraging their employees to save for retirement. With 401(k) plans now the primary retirement savings vehicle for most workers, it is very encouraging to see that the vast majority of employers have reinstated their matching contributions.”
Suspend the 401(k) Match? Issues to Weigh, Pitfalls to Avoid, SHRM Online Benefits Discipline, April 2009
Matching Contributions Boost Participation; Mixed Effect on Contribution Rate, SHRM Online Benefits Discipline, July 2007
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SHRM Online Retirement Plans Resource Page