The Wall Street Journal reported that the average employer contribution to employees’ 401(k) plans rose from 3.9% of employee salaries in 2015 to an estimated 4.7% in 2016. This represents the largest jump since at least 2007 and is great news for savers. Employers cited a few important reasons for increasing their contributions, including improving recruitment and employee retention, as well as helping older employers afford to retire to make room for younger workers.
Employer contributions and matching programs can help employees get closer to reaching their savings goals, and can also incentivize better savings behavior, in addition to improving employee retention. It’s great to see employers understand the benefits of these tools and take advantage of them.
Employee 401(k) retirement plans are for many American workers their primary source of retirement savings. The more employers can assist by building a strong, effective plan, the better the retirement outcomes will be.
To learn more about constructing an employer matching program, read our white paper Retirement Plan Best Practices: Plan Design here:
Source: “Firms Sweeten 401(k) Plans” by Sarah Krouse, The Wall Street Journal; July 18, 2017