While many employee benefits went by the wayside during the recent economic downturn, one that didn't was matching 401(k) plans, a new study finds.
Research from WorldatWork, a global HR association in partnership with the American Benefits Council, discovered that 88 percent of companies maintained matching 401(k) contributions over the past five years. Among the 12 percent of companies that either suspended or eliminated their retirement contribution programs, 5 percent have since at least partially restored their contributions.
"The survey results show that employers and employees are utilizing 401(k) plans and value these plans as an integral piece of retirement planning," said Cara Woodson Welch, WorldatWork vice president of policy and public affairs.
A 401(k) is an employer-sponsored savings plan that lets employees save money for retirement on a tax-deferred basis. Employers often entice employees to participate in 401(k) plans by offering contributions of their own, such as through matching contributions of between 25 and 100 percent of the employee's contribution each month.
Overall, the study found that nearly three-quarters of companies have at least 70 percent of their eligible employees participating in their organization's 401(k) plan. For 77 percent of the businesses surveyed, employees contributed 5 percent of their salary on average to the retirement programs.
The research also shows while the majority of employees may be participating in 401(k) plans, most haven't gone all in. More than half of the companies surveyed have less than 10 percent of employees that contribute the maximum amount allowed.
"Because 401(k) plans have become such a vital component of employees' financial security, it is essential that we strengthen the system by building on those successes," said Lynn Dudley, American Benefits Council senior vice president of retirement and international benefits policy. "This study makes clear that too many workers are 'leaving money on the table' by failing to maximize their employer's match."
The research was based on surveys of 476 American Benefits Council and WorldatWork member companies.