The number of companies making a match on their 401(k) plans has dropped by 7 percent since 2009, driven by the stock market crash of 2008 and the recession, a survey has found.
Because of the hard economic times, companies have looked for ways to cut expenses and increase profits, and many have chosen to do that by cutting back on their contributions to employee retirement accounts.
The 401k Performance Survey, conducted by American Investment Planners LLC, found that about 5 percent of 401(k) plans, or 13,811, stopped matching in 2010. An additional 2 percent stopped matching in 2011.
Forty-two percent of businesses didn’t match their 401(k) in 2011.
Brett Goldstein, director of retirement planning at American Investment Planners in Jericho, N.Y., said that he has been watching this trend closely for the past four years and doesn’t believe it will slow down any time soon.
He added that an equal percentage of companies are terminating their 401(k) plans. Since 2009, about 6 percent of 401(k) plans have been terminated. In 2011, 15 percent of traditional defined benefit pension plans went away.
Without company-sponsored retirement plans like 401(k)s or employer matching to help save for retirement, employees will need to set aside their own money for retirement and develop their own investment strategies. Goldstein recommends that individuals work with a trusted financial advisor who can help set up alternative plans like IRAs, Roth IRAs and annuities.
Another surprising find from the survey was that the average 401(k) plan lost 2 percent in 2011.
"In my experience working with 401(k)s, most employees are unaware of the performance in their 401(k) and may not have realized that they lost money,” Goldstein said.