SURVEY SAYS: What Are Your Plans for Your Match?

November 5, 2008 ( - There has been a renewed focus on employer matching contributions of late.

In the past week, there have been reports not only about the impact of an employer match on savings rates (see  Schwab Finds Employer Match, Employee Savings Link ), but also reports of a number of plan sponsors deciding to cut or temporarily suspend their match (see  Tightening Economy Drives More 401(k) Match Suspensions ).  

This week, I asked readers if they had any changes in mind for their retirement plan match?

This week, I asked readers if they had any changes in mind for their retirement plan match.

The good news - most - 58% - had no changes in mind (as one reader noted, "We have a very generous match program that our leadership believes in and does not want to change"),    and another 16% - though they caveated their response by saying "not yet" were also in that status (that's roughly three-quarters of the respondents, in total).

Now, admittedly just under 6% indicated that while no decision had been made, they were "thinking about it," while 1% each said they had suspended it or reduced it (though, as one noted, "We have a very generous match of 7.5%, but are considering reducing it to 6%. Still way above the norm!.").   On the other hand, just over 2% had increased their contribution.  "We would like to increase our match, but are awaiting approval from the owners of our company," noted one respondent.  "We went from 50% match up to 6% to the safe harbor match. In light of increasing strain on employees for health benefits and impact of market volatility on 401k balances, we wanted to send a positive signal that the co. intends to support long-term savings goals," observed another.

"We've never had a match -- our employer contribution is 6% of pay regardless of the employee contribution. It's been that way since 1983, and only recently has there been a question of whether it should be INCREASED,"  noted another reader.   Still another noted, "We have a very generous match program that our leadership believes in and does not want to change."

"Other" Comments

The remaining 16% opted for "other", but most of those were some version of "no changes", like the reader who said, "Although we won't be getting any Profit Sharing contributions this year."

And sometimes it was a practical consideration of another kind; "Ours is a "safe harbor" plan so we would lose safe harbor status if we changed the employer contribution," noted one reader.

One reader noted, validating the essence of the argument in favor of an employer match, "We eliminated our match effective November 1st. There was also a pay cut announced at the same time and since the announcements we have had at least 16 out of 135 employees reduce their contributions."

Other comments included:

"Fortunately we are surviving the current economic situation fairly well so we haven't needed to discuss cost cutting measures."

"The match is a fundamental part of the retirement program since the Company has transitioned from defined benefit to defined contribution as the primary retirement income vehicle. The financial projections would have to be extremely dire to eliminate the match."

"We typically increase our match every year. However due to this year's economic situation, the match is remaining the same."

"Effective 2/1 our match will be suspended as we move to a new recordkeeper. This has yet to be announced to the employees."

No changes (that I know of) but will be interested in the results of your survey since we are getting questions about it from the media.

"It's such a small match, no one would notice if it was suspended. So, we're going to keep it.

"Too soon to tell, the company announces earnings tomorrow."

However, this week's Editor's Choice goes to the reader who said things were status quo for now, "But it's probably just a matter of time, since we seem to be looking at everything else."

Thanks to everyone who participated in our survey!

This week we also asked readers how long they had to wait to vote. 

  • 35.8% - less than 15 minutes
  • 24.2% - 15 minutes to an hour
  •  9.5% - between 1 and 2 hours
  •  2.1% - > 3 hours

There were about 22% who waited no time at all - because they voted absentee, while the remaining 6% opted for "other" - generally voting via mail, not voting at all, or because - they ran into no lines at all - apparently chose this category.

This week's Editor's Choice goes to the reader who said there were "Only 3 people in front of me. I asked where all the lines were, and the lady in front of me said that was only in the city (Chicago) because they have to vote so many times."

Thanks to everyone who participated in our survey!