PLANADVISER - May/June 2019 - 7

data points
Company Matches on the Rise
More than 2/3 of employers now sweeten the pot to help workers save
W
hile company matches to
defined contribution (DC)
plans are by no means
universal, they have multiplied in the
past year, now being offered by more
than two-thirds (76.5%) of corporate
employers, according to the 2019
PLANSPONSOR Defined Contribution
Plan Benchmarking Report. This is up
from 73.3% in 2017.
It is noteworthy that, back in 2009,
just after the Great Recession, 5%
of the total plan sponsors offering a
match had suspended it and another
5% reduced it.
In times of economic hardship,
companies sometimes make the decision
to pull back on retirement plan
contributions. Yet, as the country has
long since exited the recession and
markets are seeing new highs, it makes
sense that companies may again want
to share revenue with their workers.
The rise in company matches jibes
with the results of a survey Nationwide
conducted in late 2017, which found
that 50% of 1,700 business owners with
fewer than 300 employees planned to
increase their 401(k) match, with 55%
of this group attributing the change to
rising revenue.
As plan size increases, so does the
likelihood the sponsor company will
offer a match, the DC Plan Benchmarking
Report notes, stating that 70.8%
of micro plans, 78.1% of small plans,
78.3% of midsize plans, 80.2% of large
plans and 85.7% of mega plans offered
them. That is a spread just shy of 15
percentage points-viz., 14.9 points-
between micro and mega plans when
it comes to matches.
As far as the type of match, 36.3%
of employers reported using a traditional
formula, but 31.3% use a stretch
match and 20.4% a tiered match.
Key Incentive
Offering a match gives workers an
important incentive to participate in
the company plan. A recent Natixis
survey found that, among nonparticipants,
34% never joined the plan
because their employer does not offer
a match or the match is too small.
By comparison, the top reason given
for participating in their DC plan was
the company match, cited by 56% of
respondents. By generation, this broke
down as 56% of Millennials, 56% of
Generation X and 53% of Baby Boomers.
By far, matches are most commonly
distributed each pay period, as cited by
76.6% of employers, the DC Plan Benchmarking
Report says. -Lee Barney
Matching Contribution Status
Overall
Micro
Offers
Does not offer
Unsure
Small
76.5% 70.8% 78.1%
23.2% 28.4% 21.8%
0.3%
0.8% 0.1%
Midsize
78.3%
21.7%
0.0%
Large
80.2%
19.5%
0.3%
Mega
85.7%
14.3%
0.0%
Employer Match Formula
Overall
7.5%
>100% of first 6% of salary
100% of first 6% of salary
Micro
Small
7.8% 6.6%
14.8% 15.2% 13.5%
51%-99% of first 6% of salary 31.2% 33.8% 27.2%
50% of first 6% of salary
<50% of first 6% of salary
Other
22.3% 19.6% 24.9%
15.1% 13.4% 18.6%
9.1% 10.0% 9.2%
Midsize
8.5%
12.5%
28.8%
24.8%
17.9%
7.5%
Large
8.8%
16.4%
33.6%
20.6%
11.3%
9.2%
Mega
7.4%
20.3%
39.6%
18.3%
5.9%
8.4%
Matching Contribution Frequency
Overall
Micro
Non-pay period: Annually
Non-pay period: Quarterly
Non-pay period: Monthly
Small
13.9% 14.6% 14.5%
2.6%
2.3%
Non-pay period: Twice monthly* 1.0%
Non-pay period: Biweekly†
Per pay period
Other
* Twenty-four times per year. †
2.7%
1.5% 3.1%
3.7% 2.2%
1.6% 0.6%
2.8% 2.5%
76.6% 74.7% 76.3%
0.9%
1.2% 0.8%
Twenty-six times per year.
Source: 2019 PLANSPONSOR Defined Contribution Plan Benchmarking Report
Midsize
14.9%
3.4%
1.4%
0.7%
2.2%
76.6%
0.7%
Large
10.7%
3.8%
1.0%
0.7%
5.2%
77.9%
0.7%
Mega
10.3%
2.1%
0.4%
1.7%
1.7%
83.3%
0.4%
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