Employers Keeping Retirement Match Steady

The majority of employers did not change their retirement account contribution formula in 2020 in spite of the coronavirus pandemic.

The majority of employers did not change their retirement account contribution formula in 2020.

A survey by Alight Solutions, covering 116 employers with a total of 5.5 million employees, found that 91% of employers made no changes to their matching process last year. However, employers who did make changes only suspended their contribution matching instead of making any permanent reduction to the amount contributed. Additionally, 99% of employers will not make any changes to their matching in 2021 as the coronavirus pandemic continues.

On the topic of retirement well-being, 90% of employers are likely to create or broaden their financial well-being programs beyond help with retirement. More than half of employers either currently have a strategy in place or are implementing one, compared to 35% of employers two years ago. Fifteen percent of employers cite an added benefit in the works to allow employees to withdraw up to $5,000 from a direct-contribution plan for the birth or adoption of a child.

Additionally, the survey discovered that student loan benefits “remain a hot topic among employers and the prevalence of benefits such as student loan consolidation and repayment assistance have been increasing. At the same time, the likelihood among employers who do not have student loan programs has been waning. This hints that student loan benefits may remain a niche offering that has a foothold in certain industries but might not become widespread across employers.”

Alight Solutions retirement survey results

During the coronavirus pandemic, almost 80% of employers “increased communications about the retirement and/or financial well-being benefits that they provide to their workers.”

Many employers want to offer more information on financial well-being to improve their employees’ experience, as well as believing it’s the right thing to do. As financial well-being programs have become more popular, a dwindling number of employers are choosing to offer them in order to “decrease medical costs,” since this is not the only thing that financial well-being encompasses. Employers would rather “integrate well-being programs to help workers create a healthy wallet, body, mind and life. Over the past two years, the percentage of employers who say they have a broad well-being program has increased from 67% to nearly 85%.”

Source: “Hot Topics in Retirement and Financial Wellbeing 2021,” by Rob Austin and Landis Cullen; Alight Solutions, 2021.