The vast majority of U.S. employers that suspended their 401(k) plan matching contributions during the recent economic downturn have since restored them, according to research by Towers Watson.
The study surveyed 260 employers that had suspended their 401(k) matching contributions and found that 75% of respondents have now restored their contributions. Among those employers, 74% reinstated the matching contributions to their previous level, while 23% restored them at a lower rate. Just 3% increased their matching contributions to a higher rate.
The most frequent employer match formula before and after the suspension matched 50% of employees’ salary deferrals, up to 6% of pay. The median duration for match suspensions was 12 months.
“Many employers are making it a priority to contribute to their workers’ retirement accounts,” said Robyn Credico, a senior retirement consultant at Towers Watson. “Employers understand the importance of helping and encouraging their employees to save for retirement. With 401(k) plans now the primary retirement savings vehicle for most workers, it is very encouraging to see that the vast majority of employers have reinstated their matching contributions.”
The full study is available at towerswatson.com/united-states/newsletters/insider/5641.