General Motors made headlines for suspending its 401(k) match last month. But dropping 401(k) matches when companies are under financial pressure is nothing new. Employer matches are not required or permanent, but most employers historically contributed from the birth of 401(k) plans in the 1980s through 2000. By 2001, matching contributions were equal to about 12 percent of firm profits, according to the Profit Sharing/401(k) Council of America.
But then recession caused many companies to re-evaluate their retirement plans. Between the 2001 to 2003 financial turmoil, a number of large companies suspended their contributions to employee 401(k)'s. Most of the companies eventually restored their matches to continue to attract talented employees, according to Alicia Munnell, director of the Center for Retirement Research at Boston College. GM, for example, suspended its 401(k) match in 2001 and restored it when the recession ended (and then scrapped it again this year). Goodyear, on the other hand, had a 401(k) match elimination go into affect in 2003 but plans to bring back the company contribution in January 2009 at 50 percent of the first 4 percent of pay—regardless of the financial situation.
Here's a look at some of the companies that cut 401(k) matches during the last recession:
Companies that Suspended 401(k) Contributions in 2001-2003
|Company||Announcement date||Employees Affected|
|General Motors||March and December 2001||50,000|
|Delphi Automotive Systems Corp.||September 2001||17,000|
|Ford Motor Co.||December 2001||45,000|
|Great Northern Paper||December 2001||1,130|
|Visteon Corp.||November 2001||9,900|
|Tech Data Corp.||April 2002||1,500|
|CMS Energy||July 2002||9,400|
|Goodyear Tire and Rubber||October 2002||33,000|
|El Paso Corp.||January 2003||3,700|
|Charles Schwab & Co.||March 2003||11,630|
|Textron Inc.||April 2003||23,000|
|Prudential Securities||April 2003||13,560*|
Source: Boston College Center for Retirement Research, 2003.