General Motors Corp., Detroit, will suspend its contributions to its salaried employees 401(k) plan to allow the company to conserve cash, Tom Wilkinson, director-news relations, said today.
When the company becomes more profitable, we will restore it, Mr. Wilkinson said, adding that company officials couldnt tell how long the suspension would last.
According to a GM filing with the SEC, the salaried 401(k) plan had $11.8 billion in assets as of Dec. 31, the latest data available. The plan covers 32,000 employees, Mr. Wilkinson said. GM matched 100% of employee contributions up to 4%.
GM contributed $82 million to the salaried plan in 2007, while plan participants contributed $339 million, the filing said.
GM previously suspended its contributions to the salaried 401(k) plan as of Jan. 1, 2006. Contributions were restored one year later with the 4% match.
The suspension does not affect GMs $8.7 billion 401(k) plan for union employees; the automaker does not make contributions to that plan under its labor contract, he added.
A Watson Wyatt Worldwide survey released today found 2% of 248 companies have reduced their 401(k) or 403(b) plan contributions this year and 4% plan to do so in the next 12 months. The survey was conducted in mid-October.
Separately, Stephen P. Utkus, principal at the Vanguard Center for Retirement Research, said a relative handful of its clients recently cut contributions to their 401(k) or profit-sharing plans. Thats to be expected in a downturn, Mr. Utkus said.
Its early in the cycle, Mr. Utkus said. Were not sure a recession has begun. Weve had some anecdotal reports, but we havent seen a trend.
During the 2001-02 economic downturn, at least 5% of Vanguards clients that offered matches eliminated or reduced them, he said.
We could see that number go higher if the current economic environment is prolonged or worsens, he added.
Some 94% of Vanguard clients offer employer matching contributions, he added.