Companies, Employees Contribute to 401(k) Accounts Despite Recession
March 18, 2009 | By Mark Schoeff Jr.
Companies and employees remain faithful to defined-contribution retirement plans despite a brutal recession, according to a report released by two benefits groups at a March 17 Newsmaker.
A survey of 505 employers shows 74 percent have not changed the amount they contribute to their workers’ 401(k) retirement accounts in the last 12 months, and they are not planning to do so in the future.
Six percent are considering a decrease, while 3 percent have eliminated the match, and 2 percent have decreased it. On the other hand, 6 percent of respondents are weighing an increase in the match.
The survey was conducted in December by WorldatWork, a global human resources association focused on compensation and benefits, and the American Benefits Council, a national trade association for mostly large companies that concentrates on federal legislation and regulation of benefits.
Company members of each organization participated. About 66 percent of the respondents said at least 70 percent of their eligible employees had a 401(k) plan in 2008. More than half of employees contribute 5 to 7 percent of their pay to the 401(k) plan. Half of employers offer a 3 to 4 percent match.
But the severe economic downturn is having an impact on 401(k) plans. Nearly half of the companies in the survey reported the number of hardship distributions and loans taken out of retirement accounts has increased.
Still, the benefits groups hailed the results as evidence that Americans are not abandoning retirement saving during the recession.
“The plans are stable,” said Lynn Dudley, vice president for policy of the American Benefits Council. “These plans are working. Employers are committed to them. Employees are committed to them. They are very, very popular.”