Finally, some good news: Employers contributing to 401(k)s again
A sign of recovery is here: 401(k) programs are now returning to their pre-crisis levels, thanks to an increase in company matching.
Nearly three-quarters of companies (73%) are offering matching contributions into retirement programs, which saw savings rates and participation drop during the financial crisis.
The joke at the time of the financial collapse was that the 401(k) plans had shrunk down to 201(k) plans.
But now, it would appear that plans are back to where they should be for a majority of businesses, Dave Gray, vice president for client experience in Charles Schwab’s retirement plan services division, told CNBC. He also said this is a positive sign, as many businesses most likely stopped contributing at signs of the crisis.
The percentage of employers offering matches was at 73% in 2005, 76% in 2006 and fell to 67% in 2009. The savings rate for participants fell from 7.23% in 2007 to 6.91% in 2011, according to Schwab data.
“As folks get more comfortable, as employers get more comfortable, we expect that we’ll see that rate slowly tick back up,” Gray told CNBC.
Other stats
Other figures reported by Schwab:
- The typical employer match is 50% of employee contributions up to 6% of pay
- 83% of employers now offer participant advice, and
- 42% of employers contribute funds to plans, even if employees opt not to contribute themselves.
How are you handling company matches at your company? Are you part of the 73% that is offering them? Or are you still waiting for things to turn around? Let us know below in the comments.
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