More than half of plan sponsors are considering reducing or eliminating their employer contributions until the COVID-19 crisis is over, according to a survey of plan record keepers conducted by two groups associated with the defined contribution business.
None of the surveyed companies has plans for layoffs or staff reductions, although many have put in place hiring freezes. But 98% of the industry is now working from home, up from 20% in January, to address social distancing guidelines. The transition to working from home caused minimal disruption since the industry has had work-from-home procedures in place for more than a decade.
To address the increase in employees working from home, record keepers have responded with an increased focus on cybersecurity, supplying employees with necessary technology and online team calls.
Participants are not shifting their investments, in a break from their behavior during the 2009 financial crisis. Instead, they are looking for loans or hardship withdrawals, the record keepers said. For those participants that are moving assets, the shift is toward fixed-income products.
“Surprisingly, a significant portion of participants are increasing their deferrals,” according to the press release.