DALLAS (BP)–With recent signs of economic recovery, many employers plan to resume matching retirement contributions in 2010. A recent survey by a human resources consulting firm found that 80 percent of for-profit employers intend to restore their matches to employer-sponsored retirement plans.
While no similar study has been conducted for churches and ministries, GuideStone Financial Resources President O.S. Hawkins encourages churches and ministries that can to follow the lead of for-profit employers.
“Faced with the difficult options of reducing headcount or reducing benefits, many churches, hospitals, colleges and other ministries chose to reduce benefits,” Hawkins said. “This was certainly understandable.”
In a matching contribution, an employer contributes an amount based on the amount the employee contributes. For example, in a 1:1 match, an employer puts $1 in for every $1 an employee contributes, usually up to some maximum. Some employers may contribute 50 cents per $1 an employee contributes and some employers may contribute $2 per $1 an employee contributes.
GuideStone, an entity of the Southern Baptist Convention, provides a free resource for ministers and churches to use in determining appropriate compensation and benefits, “The Planning Financial Support” workbook and presentation, which can be accessed at www.GuideStoneRetirement.org/ToolsandEducation.aspx then selecting Church Resources and then Employer Resources.
Many financial experts cite matching contributions from employers as an important incentive to encourage employees to participate in a retirement plan and make their own contributions as well.
Most data shows that American workers need some incentives: More than half of workers are at risk of not being able to maintain their current standard of living during retirement, according to the Center for Retirement Research, while a 2007 Federal Reserve Survey of Consumer Finance showed the average balance for someone approaching retirement was just $78,000 — only enough to generate reliable retirement income of $3,100 annually or a little more than $250 per month.
In areas of the country hit hardest by the recession, churches and ministries may not be able to resume employee matches this year. In those cases, employees should consider their retirement income needs and increase their current contributions, if possible, taking advantage of tax savings in the process.
“We recognize that the economy is not improving quickly, and in some parts of the country the recession maintains a strong hold,” Hawkins said. “It may require a sacrifice to resume making retirement contributions, but the alternative is reaching retirement age unable to take advantage of the opportunities with which you are presented.”
GuideStone participants can find estimates of their projected retirement income by visiting www.MyGuideStone.org, where they can view quarterly account statements or use the new GPS: Guided Planning Services financial advice service. GPS provides specific recommendations on adjusting fund allocations and contribution amounts to achieve desired retirement goals. (Financial advice is provided by GuideStone Advisors, a controlled-affiliate of GuideStone Financial Resources).
GuideStone also can assist individuals and employers regarding maximum contribution limits. Participants may receive assistance by calling 1-888-98-GUIDE (1-888-984-8433).
Curtis D. Sharp is executive officer for denominational and public relations for GuideStone Financial Resources of the Southern Baptist Convention.