The Baton Rouge Business Journal reports that CFO Ralph Bender announced in a memo to employees that the board of directors voted to suspend company match contributions in effect immediately. Bender cited “difficult economic times.”
“It is my hope that when times improve, this will be one of the first decisions we review,” Bender wrote in the memo, according to the Business Journal.
The memo also announced that The Advocate’s board voted to merge the company’s profit sharing plan into the 401(k) plan, effective June 30.
According to the news report, the decision is The Advocate’s latest response to the economic downturn that has hit the newspaper industry as a whole.
The Business Journal said that industrywide, advertising revenues have fallen an average of 23% in the past two years. Other newspapers have also taken the step of reducing 401(k) match contributions (see Another Newspaper Announces Match Suspension ), as have other media companies (see Newspaper Company Suspends 401(k) Match, Profit Sharing Contributions ).
The almost-daily reports of companies big and small suspending their 401(k) matches raises the question of whether this is now a trend (see IMHO: Trend Spotting ). Aside from the media industry, the resort and casino industry has also seen a number of companies cutting match contributions (see Wynn Resorts Calls Off 401(k) Match ). Large, well-known employers that have announced match suspensions include Sears (see Sears Suspends 401(k) Match in Face of Declining Sales ), Motorola (see Motorola Freezes DB Plan; Suspends 401(k) Match ), and UPS (see UPS Joins 401(k) Match Suspension List ), among others.
However, in a recent PLANSPONSOR survey, most plan sponsors said they had no plans to change their 401(k) match (see SURVEY SAYS: What Are Your Plans for Your Match? ), and other surveys in the industry seem to refute the idea that match suspension is becoming or will become a trend (see 73% of DC Sponsors Say No 2009 Match Changes ).
In a rare move for the times, Dollar Thrifty Automotive Group decided to reinstate its match after suspending it for 2008 (see Dollar Says Reinstating Match is the "Right Thing to Do" ).
A recent academic paper suggests companies consider dropping match contributions altogether, not so much because of the current hard economic times, but arguing that automatic enrollment is a far more powerful mechanism than a match for increasing plan participation and that the money sponsors spend on the match might be used more effectively to pay for other things (see (k)Plans: Miss Match?).