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Many Employees Would Take Lower Salary for Bigger 401(k) Match
Wednesday, August 13, 2014 6:40 AM

About four out of 10 employees (43 percent) say that they would take a lower salary if they were offered a bigger employer contribution to their 401(k) retirement plan, a new Fidelity Investments study shows.

The study focused on various compensation scenarios to determine how much value employees place on a 401(k) company match when making decisions about new job opportunities. According to the survey, workers were more likely to accept a position that had a company match as part of its overall compensation package – only 13 percent indicated they would take a job with no company match, even if it came with a higher pay level.

According to the study, the 401(k) plan is the sole retirement savings vehicle for an increasing percentage of U.S. workers – 42 percent indicated they are not saving in any capacity outside of their 401(k). Yet personal and retirement savings are expected to fund a significant portion of workers’ retirement income. Fidelity recommends that individuals save enough to replace 85 percent of their net final pay, and more than half of that income is expected to come from individual retirement savings. As a result, employer contributions have become increasingly important, and a key factor in helping individuals meet their retirement savings goals.

Today, according to Fidelity 401(k) data, 79 percent of workplace savings plans offer some type of employer contribution (such as a 401(k) match or profit sharing), which covers 96 percent of Fidelity’s 13 million plan participants. As of June 30, 2014, the average employer contribution was 4.3 percent, and employers contribute an average of $3,540 per employee annually, which is more than $1,000 higher than the average employer contribution 10 years ago.