Number of the day: employers who plan to reinstate 401(k) matches
80: Percentage of employers who say they plan to reinstate a 401(k) match after suspending it because of COVID-19
Fidelity’s most recent retirement report finds that 11% of employers suspended their 401(k) company match in the second quarter due to the coronavirus. Of those employers, 32% indicated they plan to reinstate their match in the next year, and 48% plan to reinstate as soon as financially possible. Only 6% of employers indicated they currently have no plans to reinstate their match.
What it means to HR leaders
Although employers often turn to 401(k) matches as a company cost-cutting strategy during economic downturns, the good news is the cuts are often temporary—and Fidelity’s data is the latest to confirm that.
For companies that have suspended 401(k) matches, it’s a good tactic to try to restore contributions as a competitive advantage, especially after the pandemic and its economic fallout pass. Robyn Credico, Willis Towers Watson’s defined contribution consulting leader, recently told HRE that good guidance is to tell employees the suspension is temporary if you can. “Tell them it’s for the overall value of the company and that you’re likely to reinstate it when you can,” she said. That will soften the blow of the news for many employees, she noted.
Company retirement matches consistently rank as one of the most popular employee benefits. They help drive participation in a workplace savings plan while providing employees with a savings goal to aim for, says Kevin Barry, president of Workplace Investing at Fidelity Investments.
“We are encouraged to see that the majority of our clients continued to provide this important retirement savings benefit,” Barry says.