This post was originally published on this site
More than three-quarters of employers kept their contribution match for employees’ retirement accounts, a recent survey of plan sponsors found.
The remaining 23% said their organization has changed the match formula, suspended or adjusted the match, according to NEPC Investment Consulting, which surveyed 105 defined-contribution plan sponsors. The firm has more than 350 clients that represent more than $1.1 trillion in assets across the U.S.
Having employer matches lowered—or worse, suspended—because of the coronavirus crisis could be detrimental to future retirement security. Workers see those matches as an incentive to put away more than they may have done otherwise, and the extra contribution from the employer bolsters how much money a person has when they do retire. Half of employers furloughed or laid off employees, the NEPC survey found.
See: We have $190,000 in retirement savings and want to use the COVID-related distribution rules to pay off $40,000 in debt—should we?
The coronavirus crisis has undoubtedly affected Americans across the country, some of whom have become ill, lost jobs or seen a reduction in wages. The good news: despite the chaos and upset, not many people have taken money out of their retirement accounts, respondents of the NEPC survey said.
A majority of plan sponsors said less than 5% of their plan participants took an early withdrawal from their retirement account as part of the CARES Act, which increased the amount of money individuals could distribute or borrow from their retirement accounts without incurring a penalty.
Nearly half, however, said they expect that figure to increase somewhat in the remainder of 2020, while a third said it would not increase, 19% said they’re not adopting the distribution provision and 2% said the rate would increase significantly. Plan sponsors said their top priorities for the rest of the year are to review communication with plan participants as well as consider or review the advice they offer and the fees they charge.
COVID-19’s impacts on retirement security will be felt for years to come for people of all ages and income brackets, experts said. High-earners will likely see the effects of the coronavirus crisis in their investment portfolios, as market volatility moves their account balances up and down, while lower-income earners will be affected by unemployment and reduced wages.
