Most companies have opted to keep their 401 (k) matches despite the economic downturn caused by the coronavirus, according to new data from Fidelity, which reported that “business matches are not going away.”
Fidelity surveyed 293 of its 22,000 companies and found that 11% reduced or eliminated their game. Of those employers who have done so, a third (32%) say they plan to deploy it next year, and almost half (48%) say they will do so if they can financially.
Employees must contribute to their 401 (k) plans for their employers to provide a matching amount, and Fidelity notes that despite the economic turmoil, 76% of Fidelity platform employees received their matches and 88% continued their contributions .
“The corporate match can help to participate in a savings plan in the workplace, while giving employees a savings goal to strive for, so we are encouraged to see that the majority of our clients go through this important retirement pay for pensions,” President Kevin Barry , president of Workplace Investing at Fidelity, wrote in a statement.
Many studies have shown that the game 401 (k) is a major driver of pension savings. Money matched 1: 1 by the company is effectively a 100% return.
Piggy bank with nest egg of 401k
In the decline of 2008-2009, about 20% of private sector employers stopped or reduced their 401 (k) matches, according to Profit Sharing / 401 (k) Council of America. The Social Security Administration notes that during that time the reduction of the match may have reduced their own amounts of contribution.
The Center for Retirement Research at Boston College has published a list of other companies that also have their matches paused – and some prominent names are on the list, despite Fidelity’s generally good news for savers.
Atrak, Arconic, Best Buy, LabCorp and Quest (which both process Covid tests), Lands’ End, La-Z-Boy, Norwegian Cruise Line, Re / Max (despite hot selling points. This affected 667,790,401 (k) participants so far, noted the center.
And last week, Exxon Mobil (XOM) said it will end its 401 (k) contest with effect from 1 October. “ExxonMobil is preparing business contributions to US savings plans, effective October 1, 2020,” the company told Yahoo Finance. “Currently, the company agrees to a minimum contribution of 6 percent employees with 7 percent of the participant’s payment.”
The move came when the company reported its first back-to-back quarterly loss in 36 years. Exxon said the suspension of the game was a result of the coronavirus’ impact on its business.
At the same time, a survey by Willis Towers Watson found that a majority of U.S. companies make it easier for employees to access their 401 (k) plan assets, and make adjustments to plans to allow people to borrow money when they need to borrow from have accounts. And although the company said 12% of employers have quit (which is in line with Fidelity), 23% are considering whether or not to do so later this year.
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@ewolffmann.“data-reactid =” 69 “>Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
