The Baton Rouge Business Journal reports that CFO Ralph Bender announced in a memo to employees that the board of directors voted to suspend company match contributions in effect immediately. Bender cited “difficult economic times.”
“It is my hope that when times improve, this will be one of the first decisions we review,” Bender wrote in the memo, according to the Business Journal.
The memo also announced that The Advocate‘s board voted to merge the company’s profit sharing plan into the 401(k) plan, effective June 30.
According to the news report, the decision is The Advocate‘s latest response to the economic downturn that has hit the newspaper industry as a whole.
The Business Journal said that industrywide, advertising revenues have fallen an average of 23% in the past two years. Other media companies, especially newspapers, have taken the step of reducing 401(k) match contributions (see “Another Newspaper Announces Match Suspension,’ “Newspaper Company Suspends 401(k) Match, Profit-Sharing Contributions’ and “Daily News Calls off 401(k) Match’).
A Match Suspension Trend?
The almost-daily reports of companies big and small suspending their 401(k) matches raises the question of whether this is now a trend (see “IMHO: Trend Spotting’). Aside from the media industry, the resort and casino industry has also seen a number of companies cutting match contributions (see “Wynn Resorts Calls Off 401(k) Match’ ). Large, well-known employers that have announced match suspensions include Sears (see “Sears Suspends 401(k) Match, Drops 1,100 Jobs’), Motorola (see “Motorola Freezes Pension, Suspends 401(k) Match’), and UPS (see “UPS Joins 401(k) Match Suspension List’), among others.
However, in a recent PLANSPONSOR survey, most plan sponsors said they had no plans to change their 401(k) match (see “SURVEY SAYS: What Are Your Plans for Your Match?’), and other surveys in the industry seem to refute the idea that match suspension is becoming or will become a trend (see “73% of DC Sponsors Plan No 2009 Match Changes’).
In a rare move for the times, Dollar Thrifty Automotive Group decided to reinstate its match after suspending it for 2008 (see “Dollar Says Reinstating Match “Right Thing to Do”’).
A recent academic paper suggests companies consider dropping match contributions altogether, not so much because of the current hard economic times, but arguing that automatic enrollment is a far more powerful mechanism than a match for increasing plan participation and that the money sponsors spend on the match might be used more effectively to pay for other things (see “(k)Plans: Miss Match?’).