For folks hoping their employers would reinstate their 401(k) match this year, we have some bad news: Probably not going to happen.
And that’s after the vast majority of companies that suspended their match vowed this was the year they’d bring it back. Earlier this year, some 80% of companies told Hewitt Associates they’d reinstate their retirement plan match – one of the most popular benefits out there.
Now, well more than half-way through the year, it appears only 30% of companies made good on that promise.
That leaves a lot of disappointed (and nervous) employees. After all, study after study shows that many people remain in dire financial straits. Knowing they’re not socking as much money away for retirement will unsettle a lot of folks.
Not to mention a match is one of the biggest carrots to get employees participating in a 401(k). So, many companies without a match may start seeing either employees decreasing their contributions or a drop in participation overall.
Even harder to regain: Trust in the company
Then there’s the loss of trust that comes from reneging on such an important promise.
Understandably, as the economy isn’t picking up the way anyone wanted (or expected) in 2010, businesses are being cautious. That’s why they’re hesitant to reinstate such a costly benefit, even if they’d hinted (or vowed) that they would.
If your company’s in this boat, there are steps Finance, along with HR, will need to take to keep morale up:
- Come clean ASAP. If your company has changed its mind about reinstating or raising the 401(k) match this year, let employees know ASAP. Letting folks continue to hold out hope will only set them up for bigger disappointment if it doesn’t happen.
- Explain why. It’s certainly not going to be a popular move. But with the personal financial tough times employees are facing, they’d almost have to understand why it may be premature to open the corporate wallet that wide this soon.
- Resist the urge to promise again. Of course, when breaking the bad news, the bearer may be tempted to offer a new timetable for reinstating the match. It’s a great way to soften the blow and offer some hope. Don’t do it. Imagine the backlash if your company had to go back on its word a second time!
