If you’ve been fortunate enough to work in a place that offers a 401(k) you should consider yourself lucky. It appears that many companies are going to end that perk, if they haven’t ended it already. Posts of it on job searching boards like those on Glassdoor or on Social Media show that there is a trend now happening nationwide and speaking up about it sooner rather than later increases your chances of getting that perk back.
It is estimated from a survey by Willis Towers Watson that 1 in 10 companies in the United States have cut, suspended, or reduced matching of 401(k) deposits. The reason you may think that is happening would be corporate profits are down, but the third quarter reports of corporate profits hit records all over the place, which you would hope would lead to better compensation for employees. In fact profits hit $2.32 trillion per the U.S. Commerce Department, half a trillion higher than the second quarter and higher than peaks from 2019.
So why do 10% of employers claim they can’t match 401(k) contributions? The last bastion for retirement assistance from employers usually doesn’t crack 5% of salary levels, a cost that in most companies is negligible as not everyone takes advantage of that.
It appears that up to 12% of employers did suspension or cutting of matching during the year at some point, but only about 20% of them restored it. The rest have all taken the change as an advantage for their bottom lines, although some have said they will go back to giving it by the end of 2021.
With the decline and near elimination of private pensions since the 1980s the “replacement” of that benefit has been matching 401(k) contributions as a job benefit. If you’re given the opportunity and can put that much away and still pay your bills it is expected that you will take it. Most people believe that you should always take that opportunity.
So, why are they still blaming COVID for this cut? Well, many companies were nervous about how the coronavirus pandemic would hurt them back in the spring, which isn’t something they should be shamed for. What will be a sticking point is that these companies is that they appear to be looking for ways to cut the benefit so that they can pad their bottom lines.