Nearly 25% of U.S. employers dropped contributions to their 401(k) plans since September 2008 to cut costs, according to a survey released today.
Another 15% of employers have decreased their matching contributions even though 87% of respondents said providing a match was the most important feature of their 401(k) plans.
The survey, conducted by CFO Research Services for Charles Schwab Corp., was conducted in March and April. Results were based on responses from 107 human resource professionals and 112 senior finance executives.
Other measures taken to slash the costs of administering 401(k) plans since September include limiting automatic enrollment to targeted employees rather than all staffers (25% of respondents); offering more individualized 401(k) investment advice to employees instead of broad-based educational campaigns (25%); and changing to funds with lower operating expenses, including index funds (4%).
After matching contributions, the second most important 401(k) feature, cited by 87% of respondents, was providing investment advice to employees. In fact, 80% said greater access to such advice is more important now than a year ago. Sixty-three percent said employee worries over the economic downturn are creating a difficult work environment.
Employers didnt believe the structure of the 401(k) needs widespread changes. Most employers (56%) gave the current system a B grade.