June 25, 2009

Companies to link benefits to profits

U.S. companies that reinstate 401(k) retirement benefits as the economy improves may tie matching funds to company profits, a Watson Wyatt survey said.

The survey found that 25 percent of companies that plan to reinstate the matching funds benefit in the next 12 months will likely vary their contribution to reflect rising and falling profits, USA Today reported Thursday.

As the economy slowed in the past 18 months, about a quarter of U.S. companies have either canceled their contributions to 401(K) plans or have considered that option.

David Wray, president of the Profit Sharing/401k Council of America said smaller companies have already begun tying contributions to net profit.

A 401(k) benefit match, however, is key to attracting talented employees, said Virginia Olson at consulting firm Towers Perrin.

The two benefits that employees will look at when assessing employment opportunities are health benefits and the match,Olson said.