Suspending Match Considered Extreme Move

The 401(k) market is standing strong in the face of the economic turmoil, a December 2008 survey from the American Benefits Council and WorldatWork reveals. Nearly three-quarters of respondents reported no change in their matching contributions.

That’s the good news, but for those companies thinking of reducing or dropping 401(k) matching all together (11%), employers should beware of the impression this could send to employees if ABC’s Lynn Dudley’s comments at a press conference today are any indication.

“By and large, employers are consistently making this match. The economic downturn hasn’t caused them to drop off their match,” says Dudley, senior vice president of policy. “Where that has occurred, it has been a response to a particularly devastating circumstance for an industry or company, and maybe some of the challenges that they’re experiencing in the defined benefit/pension area as well.”

Dudley says dropping the match doesn’t mean employers won’t bring it back eventually. In fact, that’s been the experience she’s seen so far.

Still, just because the match comes back doesn't mean employee confidence in the company will.

How do you think employers reducing or dropping the 401(k) match is impacting employee morale? Have you seen your customers experience any consequences from doing so? Share your thoughts below.