An overwhelming majority of 401(k) plan sponsors didn't change their employer contributions to their plans during the COVID-19 pandemic, a report by the Plan Sponsor Council of America said Tuesday.
The report, based on responses from 139 plan executives, noted that 91.2% took no action, 3.7% suspended company matches and 1.5% reduced company matches. The report added that 1.5% reduced non-matching employer contributions, 0.7% suspended non-matching contributions and 0.7% were "considering changes."
PSCA also reported that plan executives' responses to the pandemic were less dramatic than plan executives' reactions during the 2008-2009 economic crisis.
"We often are asked how companies are responding to current economic conditions as compared to the financial crisis of 2008/2009," Hattie Greenan, research director for PSCA, part of the American Retirement Association, said in a news release. "The short answer is that, over a somewhat longer time horizon, four times as many employers suspended or reduced the match (during 2008-2009) than compared to now." Remarking that employers' responses "seem more measured" now than during the economic crisis, Ms. Greenan added, "We may be seeing the impact of lessons learned."
Nevin Adams, chief content officer for the American Retirement Association, speculated that many sponsors "went into this period expecting it wouldn't last all that long, likely muting the potential impact on retirement savings," according to the news release.
"Since then, there have been other mitigating factors, such as the recent broad-based government assistance in the form of the Payroll Protection Program, and that has almost certainly helped as well," Mr. Adams added.
The PSCA survey was conducted in early November with 21.6% of respondents representing plans with 5,000 or more employees, 15.8% representing plans with 1,000 to 4,999 employees and 23% representing plans with 200 to 999 employees. The rest of the respondents were from plans with fewer than 200 employees.
