One in Four Employers Cut Retirement Plan Contributions in 2009
Some employers are in no hurry to reinstitute previous benefits, according to the sixth annual Retirement Plan Survey conducted by Grant Thornton LLP, Drinker Biddle & Reath LLP, and Plan Sponsor Advisors. Among those who have scaled back or eliminated contributions, 53% have not yet decided whether to return to previous levels in 2010, and 33% have no plans to do so.
In addition, one-third (33%) of plan sponsors indicated that participants decreased their contributions, while 56% say they have seen increases in loan requests, and 34% of plans have had increased hardship withdrawals. However, only 7% of plan sponsors reported large increases in loan requests, and just 3% of plan sponsors reported significant increases in hardship withdrawals.
“Our survey shows some interesting changes in contribution patterns among plan participants. Yet even in times such as these, it seems that the majority are staying the course and leaving their retirement accounts alone,” said Dave Wolfe, partner in the Employee Benefits and Executive Compensation practice at Drinker Biddle & Reath, in a press release.
Other survey findings included:
- Forty-three percent of respondents said they had experienced a reduction in force, and 16% said they had instituted a hiring freeze. However, approximately 34% of respondents experienced no change in the level of their workforce.
- Forty-nine percent of respondents instituted salary freezes, and 17% capped the rate of salary increases.
- Nineteen percent said the rates of bonuses were reduced, and 11% froze bonuses.
- Nearly one-third (31%) of respondents indicated that they did not see a change in compensation practices during 2009.
A copy of the Retirement Plan Survey 2010 can be downloaded at www.gt.com/retirementsurvey.