A major investment manager is reporting that employer matches to 401(k)s are increasing as the economy improves.
Company matches in 401(k)s are on track to hit 4.7 percent of employee salaries this year, up from 3.9 percent in 2015 and way up compared to 3 percent in 2009 in the depths of the financial crisis, according to the 107-page report.
Despite these improvements employee outlook for retirement has only marginally improved: 60% of workers have some confidence in being able to fund retirement, while 39% lack confidence. These remain below confidence levels before the 2008 recession.
Take-aways for Union Negotiators
As our employers have pushed to replace traditional pension plans with 401(k)s, it's crucial that these accounts are being funded at adequate levels. Experts recommend that employees relying on 401(k)s should be saving between 12 -15% of their annual income to fund a secure retirement.
In bargaining, request amounts that are being contributed to the 401(k), both from the employer and employees, to assess if the unit is meeting the 12% savings benchmark. If not, increases employer matches or automatic employer contributions should be considered at the table.
The 401(k) match is back, and it’s getting bigger (The Washington Post, July 18, 2017)
The 2017 Retirement Confidence Survey: Many Workers Lack Retirement Confidence and Feel Stressed about Retirement Preparations (EBRI Issue Brief March 21, 2017)
How much should you be saving? (Vanguard)