By: Chavon Sutton
February 8, 2010
Employees who took a hit on their savings last year might finally be in for some welcome news: Companies are stepping up efforts to help them save more for retirement.
Of companies that suspended or reduced 401(k) match programs, 80% planned to restore them this year, according to a survey conducted by Hewitt Associates, a global human resources consulting firm.
Workers were dealt a double-blow during the recession, as historic stock market declines decimated retirement portfolios while companies slashed 401(k) matches to reduce costs.
"We viewed [the 401(k) suspensions] as a temporary measure needed to provide cash flow to companies," said Alison Borland, retirement strategy leader for Hewitt's outsourcing business, who expected only 50% of companies to restore the match in 2010. "We are relieved that this is reversing this quickly."
Large employers reinstating company matches for 2010 include American Express and FedEx.
The survey also found that employers are losing confidence in their employees' ability to save for retirement.
Of the 162 mid-to large-sized companies surveyed, 54% of employers said they were less confident, compared to 66% in 2009. Less than 18% of employers said they were "very confident" in their workers' ability to save enough.
As a result, companies said they are offering more investment services and tools to help workers navigate the maze of savings options. And the number of firms offering automatic enrollment, in which employees opt out of plans instead of signing up, has increased from 51% a year ago to 59%.
Although unemployment hovers at 9.7%, some experts say the restoration of the company match is a signal of employer confidence and may be a precursor to hiring.
"When companies start to restore the match, it gives employees more confidence and signals what the employer perceives as underlying strength in the market place," said Brigitte Madrian, a public policy professor at Harvard University. "We should be happy about this news."