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

August 14, 2009 |  8:30 am

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