Benefits December 21, 2001

Employers Strike the Match

December 21, 2001 (PLANSPONSOR.com) - As economic times get tougher, companies are snipping costs right and left and matching contributions to employee 401(k) plans are one of the casualties.

Reported by

Camilla Klein

According to the Profit Sharing Council of America (PSCA), the amount of money that companies contribute to these plans falling by 25%. And already this year, key players in the troubled auto industry have cut their company matches, with:

Chrysler suspending its 401(k) match early last month, after trimming its contribution from 100% to 60% in an earlier cost-cutting plan.

General Motors slicing off another forty cents per dollar on its match (see Company Match Hits the Skids at GM

Ford Motor Company eliminating its matching contribution and making other benefit cuts
Auto supplier Visteon slashing its 60% 401(k) match in a cost cutting initiative (see Visteon Cuts Company Match )

Christine Kellogg, who heads up the Midwestern region of William M. Mercer’s defined contribution consulting business has heard from 10 employers who are considering forgoing improvements to the company’s match.

“Those with flexibility in a discretionary match just go ahead and change it, without talking it over with us,” says Kellog.