Half of the workers for companies that have suspended matching contributions to 401(k) plans are also covered by an open defined benefit pension plan, according to EBRI.
Also, 16% of the workers are employed by companies that are obligated to fund a frozen DB plan, and 8% work for companies with both an open and a closed DB plan that require funding, according to an Employee Benefit Research Institute report.
“Most of these workers are with firms that have both types of retirement plans,” said the report’s authors, Dallas Salisbury, EBRI president and CEO, and Elisabeth Buser, program associate and director of new media. “Because of the current economic conditions, many of these employers must make what are unexpected contributions to the defined benefit plan as a result of asset losses and liability growth, but they can eliminate what are discretionary matching contributions to a 401(k)-type plan.”
The EBRI report, “Many 401(k) Sponsors Suspending Matching Contributions are Funding Defined Benefit Pension Plans,” was based on a review of 251 401(k) plan sponsors that have suspended matching contributions for a total of about 4.4 million workers, according to the report.
