By Brett Arends
If your employer used the Covid crisis to cut or suspend the 401(k) match this year, and hasn’t reinstated it, call up human resources and give them a hard time.
Posting about it on jobs websites like Glassdoor, and on social media could be a good move too. You don’t have to use your own name.
Also: Feel free to drop me a line here.
Shamefully, nearly 10% of U.S. companies have used the crisis to cut or suspend the 401(k) match, reveals a new survey from Willis Towers Watson, a blue-chip pension and insurance firm.
What’s their excuse? U.S. corporate profits hit a record in the third quarter, thanks to the federal stimulus bonanza underwritten by you and me.
Profits hit an annualized rate of $2.32 trillion over the summer months, according to the U.S. Commerce Department — jump of nearly half a trillion dollars from the second quarter, and just surpassing the previous all-time peak set last year.
Meanwhile the average stock in the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.11% , as measured by the Invesco S&P 500 Equal Weight ETF /zigman2/quotes/202854823/composite RSP +0.78% , has rocketed 80% from the March lows.
Yet one-tenth of employers can’t find the money to match their employees’ 401(k) contributions? Not even up to the usual, measly 4% or 5% of salary (which is the average)? Really?
Willis surveyed 464 companies with defined-contribution retirement plans—i.e., 401(k) plans or equivalent. Just over half the companies had more than $1 billion in their plans’ assets. The survey was conducted in September.
Some 12% of employers, about one in eight, told Willis they had suspended or cut the matching contribution this year due to the crisis. Some 21% of that group (2.5% of all employers) have restored some or all of the cut, the survey reports.
That leaves 9.5% of all companies on the roll of shame.
Most of those told Willis that they were planning to reinstate the match, either this year or in 2021. We shall see who does and who doesn’t.
Employee matches are a valuable part of compensation. Every employee who can should contribute to their company 401(k) at least up to the level of the match, so they get this extra money. You’ve earned it. Take it. You may have to live for 30 or 40 years in retirement and you may need every nickel you can get.
OK, some of the companies that say they’ve dropped the match may be in deep financial crisis as a result of the lockdowns, and they may say they can’t afford it.
But if that’s the case, look to see if they’re still handing out the goodies in the C-suite. Sorry to sound cynical, but I’ve seen this movie before. I’ve been covering corporations for about a quarter-century, as an analyst and a journalist, and I’ve seen this movie a lot .
As the old saying goes, “Never let a crisis go to waste.”
Let’s make sure employers don’t use this crisis to skimp on what the working stiffs have earned.