401(k) Matches Returning? Not so fast...

Posted by: Jena McGregor on August 18, 2009

Some good news has been trickling out that managers are planning to reinstate all those perks they cut. A recent Watson Wyatt survey found that about 43% of employers who’ve cut their 401(K) match should reinstate them within the next year.

Unfortunately, some experts see that as unlikely. As this story in Workforce Management claims, it’s likely to be late 2010 or early 2011 before those cut benefits are given back to employees. Because of the way many 401(k) plans are designed on a calendar year, the article reports a Mercer retirement expert saying it could be January 1, 2011 before employees start getting those perks from their employers again. ANd when those benefits do come back, the story notes, they may not be the same—many companies are weighing the possibility of making them dependent on profit sharing, rather than a fixed amount.

I have to wonder how all this is going to affect the employment marketplace in years to come. Supposedly, true star performers are still getting paid what companies hope will keep them in their seats. But when benefits are cut, they tend to get slashed across the board—both among A players and middling managers. Someday, when the job market does improve again, those valued employees could decide to flee for more generous employers.

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