Like a Category 5 hurricane, the economy has already ravaged most 401(k) plans. As the storm rages on, employers are pondering the future of their company’s benefits plans.
While most employees still consider 401(k) and 403(b) plans a must, many companies are finding it harder to carry the cost of payroll, health insurance and retirement benefits in today’s economic climate.
With no quick fix on the horizon, several businesses — especially ones with 500 employees or less — are making big changes to their retirement plans.
More small firms are dropping their retirement plans than in previous years.
Example: Benefit Plans Plus, a company that specializes in retirement plan design, has seen 12 plans dropped in 2008 — compared to six in all of 2007. The company expects more companies to exit in 2009, as well.
Like every other category, the industries hit hardest include:
- mortgage, and
Other companies are taking a less drastic approach — albeit slightly less drastic.
Businesses of all stripes, including General Motors Corp. and Ford Motor Co., are ending their 401(k) match for salaried employees.
According to a Watson Wyatt survey, 2% of employers have already decreased their 401(k) or 403(b) match, with another 4% of companies planning to do so in the next year.
Are your staffers on edge over their 401(k) plan’s performance? Be sure to check out our latest advice.