NEW YORK (Reuters) - A quarter of U.S. employers have eliminated or plan to cut matching contributions to employee 401(k) retirement plans to save money amid the economy’s downturn, according to research released on Monday.
A quarter of U.S. employers also have instituted or are planning limited enrollment rather than open the savings plans to all employees, according to the study conducted for Charles Schwab Corp. by CFO Research Services.
Although the study showed that since September, 23 percent of companies have eliminated 401(k) matching contributions, or are planning to do so in the near future, most see the move as temporary, said Steve Anderson, who heads Retirement Plan Services at Charles Schwab, a financial services provider.
“Most view that as a temporary step. They don’t see that as a long-term approach,” he said.
Workers with 401(k) plans have seen their savings hit hard in the recession. A 401(k) account allows workers to defer taxes on some income and typically put the money into a mix of stock and bond mutual funds and other investments.
Companies often match all or part of employee contributions.
Asked to identify the most important feature of their company’s 401(k) plans, 87 percent of those polled said it was the company’s match, the Schwab study said.
Second most important was providing employees access to 401(k) investment advice, the study said.
Of 107 human resource and 112 senior finance executives polled, 63 percent said employee concerns over personal finances are creating a more difficult work environment.
The online survey was conducted in March and April among executives at companies with revenues ranging from $100 million to more than $10 billion in a cross-section of industries.
More than half of the respondents worked for companies with more than 1,000 employees eligible for participation in their 401(k) plans.
The statistical margin of error was 6.6 percentage points. The study did not break down how many companies have eliminated matching contributions versus those who plan to do so.
Reporting by Ellen Wulfhorst; Editing by Jackie Frank