16: Percentage of companies that are considering reducing or eliminating 401(k) matches
Overall, about 6% of companies have reduced or eliminated employer contributions or matches to their retirement plan, according to a survey of 369 firms by consultancy Pearl Meyer. But 16% said they were considering doing so.
HR and other corporate leaders dealing with economic strain from the coronavirus pandemic are left making a handful of tough decisions–like mulling whether or not to halt or reduce 401(k) contributions in an effort to save money. Although the report from Pearl Meyer finds fewer than 1 in 10 employers have indicated plans to suspend or reduce contributions due to the coronavirus pandemic, many more companies are in wait-and-see mode, meaning numbers might jump exponentially in the coming months.
HR leaders who decide to make 401(k) changes need to properly communicate the decision and the plan to employees, experts say. They should be open and honest about their decision and the details, explain other rewards employees still have available, and encourage workers to keep contributing, if even if the company is no longer doing so.
Another important piece of advice from experts? Try to make any cuts to matches temporary, and reinstate them as things get better. Company matches have long been a recruiting and retention tactic, a way to boost employee morale and loyalty and a proven way to help employees save more for their retirement.