One of the building blocks of the U.S. retirement savings system is the employer match. If workers contribute to their retirement savings, 54% of employers will contribute as well, according to a recent report by the Plan Sponsor Council of America (PSCA). By helping people prepare for retirement, the match boosts the financial security of workers while giving employers additional workforce flexibility.
Employers Need to Reinvent Retirement-Savings Match
Economic hardship is making some companies reconsider their contributions.
October 19, 2020
Tim Robberts/Getty Images
Summary.
One of the building blocks of the U.S. retirement savings system is the employer match. If workers contribute to their retirement savings, 54% of employers will contribute as well, according to a recent report by the Plan Sponsor Council of America (PSCA). But our current pandemic-fueled recession threatens to undermine the employer match as we know it. According to a survey by the PSCA, about 20% of employers are considering suspending or cutting their matching. Such cutbacks would significantly reduce retirement savings, given that the most common match involves the employer contributing a dollar for every two dollars saved by the employee. These are tough times, but the current crisis is an opportunity to reinvent the match, not abandon it.