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More firms expect to restore salary cuts and 401(k) matches soon

Some hope for workers who’ve suffered pay cuts or reductions in their company’s contribution to 401(k) retirement plans in this brutal recession: A growing number of employers say they’re planning to undo that damage in the next six months.

From a Watson Wyatt survey this month of 175 large companies:

--- Forty-four percent of firms that reduced salaries plan to restore those cuts in the next six months, compared with the 30% that had that expectation in a June survey.

--- Twenty-four percent of companies that reduced 401(k) match contributions expect to reinstate the matches in the next six months, up sharply from just 5% in June.

Presumably, salary and 401(k) match reinstatements will depend on the economy turning up. Forty-two percent of companies say they believe the economy either already is rebounding or is hitting bottom now. But 25% don’t expect a recovery before 2010.

The survey also points up the struggle many workers are facing to make ends meet: More than a third of employers (36%) say they’ve noticed an increase in the number of employees taking hardship withdrawals from retirement savings plans in the last two months.

-- Tom Petruno

 
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