The pandemic, which has changed the way millions of people work, is also starting to change the way they save — and not in a good way.
Some 12% of employers have suspended matching contributions to their 401(k) plans, and an additional 23% were planning to cut their match or were considering it, according to a survey conducted in late April by Willis Towers Watson, a human-resources consulting firm. A separate survey by the Plan Sponsor Council of America found that nearly 22% of companies with 1,000 or more employees are suspending or reducing matching contributions to 401(k) plans. Companies in hard-hit industries, such as retail and travel, were more likely to suspend contributions to employees’ retirement plans.
How quickly matches are restored will depend on how fast the economy recovers, but many companies hope the suspension will last only a few months, says Robyn Credico, defined-contribution practice leader for Willis Towers Watson. “I think there’s a lot of belief that by the last quarter of this year or early next year, things will improve,” she says.
Although a company match provides a great incentive to contribute, don’t use the loss of your match as an excuse to stop saving, Credico says. Instead, if you can afford it, try to contribute a little more to make up the difference. With or without a match, she says, “your retirement needs aren’t going to change.”