By: Russ Kamp, CEO, Ryan ALM, Inc.

This could happen to any company, so I’m not writing this post to pick on Sherwin-Williams (love their paint), but they just happen to be the latest firm to “temporarily” suspend the matching contribution into the employee 401(k) plan. S-W cited economic conditions, that in many cases are getting worse, for the need to preserve cash at this time. It is also being reported that they did this same thing during the GFC and again in 2020 during Covid. In both cases, they eventually restored full-matching of benefits at 100% on the first 6% contributed by employees.

Again, I’m not picking on Sherwin-WIlliams. But this decision highlights my concerns about 401(k)s in general. It is bad enough that we are asking untrained individuals to fund, manage, and then disburse a “retirement” benefit with little disposable income, investment acumen, or a crystal ball to help forecast longevity, but we also have employers who can suspend, reduce, or eliminate contributions at the drop of a hat.

Few American workers are saving enough to ensure a quality retirement. With general living expenses continuing to rise, the assets needed to enjoy a retirement is getting more significant all the time. When an employer can suspend or amend a contribution level and an employee can suspend contributions, take a loan, switch jobs and cash out a balance, this vehicle is not a retirement account. It is truly a glorified savings account. We need to bring back defined benefit plans as the primary retirement program. DC plans were intended to be supplemental, and given the funding challenges, that’s the lane that they should occupy.