When a company suspends its 401(k) match, it certainly hurts the retirement security of all employees. Approximately 4.4 million workers at 251 companies have lost company 401(k) contributions since the recession began. However, about half of the newly 401(k) matchless employees continue to receive another form of retirement benefits from their employer. Some 20 percent of the workers who no longer receive a 401(k) match continue to have access to a traditional pension plan and 30 percent are offered a cash-balance plan, according to a recent analysis by the Employee Benefit Research Institute. Another 16 percent of the employees without a 401(k) match work at firms with a frozen pension plan, but workers cannot accrue additional benefits and/or new employees are not allowed to join the plan. About 8 percent of the workers have an employer with both an open and a frozen traditional pension plan.
For example, AARP, a giant advocacy group that represents the interests of older Americans, suspended its 401(k) match for employees in March, but still maintains a traditional pension. However, E.W. Scripps Company, a Cincinnati-based media company, announced plans in February to suspend company 401(k) contributions and freeze its pension plan. The suspension of a 401(k) match is the most serious for employees who don’t have access to another type of retirement plan. The EBRI analysis of public data found that approximately 20 to 30 percent of the workers who lost their company’s 401(k) match now receive no employer contribution to retirement.