Three-Fourths of Firms Reinstated Match to Previous Level

October 19, 2011 ( – A Towers Watson analysis of 260 companies who made changes to employer match contributions to deal with the recent economic crisis finds 231 originally suspended their matches, while 29 chose to reduce them.

According to Towers Watson, the majority of the analyzed companies chose to reinstate their match (75%). Of those that reinstated their match, 105 companies (74%) reintroduced the original match amount. Among these plan sponsors, the most frequent match formula before and after the crisis was 50% of up to 6% of salary.  

Reinstatement data were unavailable for 26 of the 231 companies that originally suspended their match.  

About 23% of companies that suspended and then reinstated their match reduced the match. Among these companies, the reinstated match was slightly more than half of their original contribution. A small minority (3%) reinstated a higher match, increasing the formula by an average 1.4 percentage points. In all but one of these cases, the increase was associated with a pension close or freeze, and the higher match was intended to make up for some of the lost DB plan benefits.  

Forty percent of companies in the analysis reinstated their matching contribution by the beginning of 2010. The second-largest wave of reinstatements was in early 2011.  

The median duration for match suspensions was 12 months, for companies with quantifiable dates. Most companies reinstated their match after nine or 12 months.  

Among industries, manufacturing and health care had the highest reinstatement rate, at 88%, and entertainment had the lowest reinstatement rate, at 50%. With the exception of the entertainment, financial and publishing industries, reinstatement rates exceeded 70% for all sectors.  

Of the 29 organizations that reduced their DC match during and after the recession rather than suspending it outright, 31% have since reinstated their pre-reduction match formula. Of these companies, the median duration of the temporary lower match rate was 12 months. Where the reduced formula remains in effect, the match was reduced by an average of 2.19 percentage points.