Mounting fiscal troubles and budget tightening have led some public defined contribution plan sponsors to reduce or eliminate matching contributions to their plans.
In Los Angeles County, labor negotiations could determine the fate of matching contributions for county plans. In Maryland and South Carolina, employer matches already have been eliminated or suspended. And officials in Colorado have recommended eliminating the match for the state's $827 million 401(k) plan.
That four plans have stopped their matches or are considering doing so is significant because very few public plans have employer matches. That's because government-sponsored defined contribution plans usually complement large defined benefit plans, which carry fairly rich benefits. An informal and unscientific survey among members of the National Association of Government Defined Contribution Administrators turned up 20 public plans with matching contribution provisions.