Major employers who cut jobs often reduce or eliminate retirement benefits for the workers who remain. Macy's, Inc., for example, announced today that 7,000 positions are being trimmed from the company's workforce in offices, stores, and other facilities. Employees who make the cut will face a smaller 401(k) match in 2009.
Executive merit salary increases in 2009 will also be eliminated at Macy’s. And management is recommending a reduction in executive perks such as merchandise discounts, company cars, company-paid life insurance, and financial counseling. The retail chain estimates that these cuts will reduce expenses by approximately $250 million in 2009 and $400 million per year beginning in 2010.
“In the short and long term, the actions being announced today will make us a more lean and efficient company and a stronger competitor," says Terry Lundgren, chairman, president, and CEO. “Especially in the current challenging economy, we must operate in a responsible manner that allows us to maximize the value we offer to our customers and enhance our profitability. That includes reducing expenses and conserving cash so we can remain financially healthy.”
The cuts at Macy's mirror those made by Saks Incorporated last month. On January 15, the company announced the elimination of 1,100 corporate support and store positions. The high end retailer also eliminated 2009 merit-based wage increases for the entire workforce, suspended its 401(k) match for a minimum of one year, and halted future benefit accruals for associates remaining in the company's pension plan.
Saks and Macy's are two examples of the more than 40 companies that have announced plans to suspend or change their 401(k) match in the past 9 months.