Last week General Motors announced plans to temporarily suspend the practice of making matching contributions to their employees’ 401(k) accounts. This cut, coupled with the impact of the reeling stock market, only adds to the sense of retirement insecurity felt by workers who have seen the nation’s pension and 401(k) account balances plummet by as much as $2 trillion in the past year and a half.
Now, as the Washington Post points out, workers are increasingly finding that they will have to fend for themselves when it comes to their retirement security.
It is worth noting that when GM announced in 2006 its decision to break its pension promise to salaried employees by freezing its traditional pension, it did so with the promise of making matching contributions to workers’ 401(k) accounts. Now the company has broken this promise, too. This news comes on top of GM’s July announcement that it is cutting health benefits for all salaried retirees over the age of 65.
Sure, GM is struggling financially, but the company will probably not be the only one to break its retirement promises to workers. Watson Wyatt estimates that out of the 248 companies they surveyed, 2 percent of these companies have reduced their 401(k) or 403(b) matching contributions this year and 4 percent plan to do so in the next 12 months.
It will be interesting to see how many of the companies planning to reduce or eliminate matching contributions will reinstate their contributions once the economic crisis is over.