25 pc employers in US are cutting back 401(K)

A quarter of US employers have eliminated matching contributions to employee 401(k) retirement plans...

A quarter of US employers have eliminated matching contributions to employee 401(k) retirement plans since September to save money amid the economys downturn,according to research released on Monday.

A quarter of US employers also have instituted limited enrollment rather than open the savings plans to all employees,according to the study conducted for Charles Schwab by CFO Research Services. Although the study showed 23 per cent of companies have eliminated 401(k) matching contributions,most see the move as temporary,said Steve Anderson,who heads retirement plan services at Charles Schwab,a financial services provider. Most view that as a temporary step. They dont see that as a long-term approach, he said.

Workers with 401(k) plans have seen their savings hit hard in the recession. A 401(k) account allows workers to defer taxes on some income and typically put the money in a mix of stock and bond mutual funds and other investments. Companies often match all or part of employee contributions.

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Asked to identify the most important feature of their companys 401(k) plans,87 per cent of those polled said it was the companys match,the Schwab study said.

Second most important was providing employees access to 401(k) investment advice,the study said. Of the 107 human resource and 112 senior finance executives polled,63 per cent said employee concerns over personal finances are creating a more difficult work environment.

The online survey was conducted in March and April this year among executives at companies with revenues ranging from $100 million to more than $10 billion in a cross-section of industries.