Defining Their Contribution: What Companies Offer Employees for Retirement

With the projected strain on social security, employees should plan to contribute more to their retirement savings. To aid employees, 55.3 percent of employers offer a pension plan with a defined contribution, according to the Benefits USA 2006/2007 annual survey of more than 5,400 benefits plans. Another 34.8 percent of organizations offer defined contribution plans, along with defined benefit plans.

Of organizations providing a defined contribution plan, 81 percent had a 401(k) with an employer contribution, and 24.3 percent reported offering a profit share option. ESOP plans were offered by 11.3 percent of companies reporting.

Matching formulas remain popular with employers, as 77.7 percent use them to determine the employer match. On average, companies in all industries match 50 percent of an employeeís contribution up to an average maximum of 5.5 percent of the employeeís salary. In comparison, those in technology match 64.8 percent of an employeeís contribution, up to an average maximum of 6.4 percent.

While this type of matching is most prevalent, 10.5 percent of organizations use a tiered company match. On average, companies in all industries using this method contribute 93.4 percent up to 3.2 percent of employee salaries, and then, the companies contribute 46.4 percent up to 6.4 percent of employee salaries. These numbers vary by industry. For example, health care companies contribute 81.1 percent up to 2.8 percent of employee salaries, and then put in 37.8 percent up to 5.9 percent. While, not-for-profits contribute on average 90.4 percent up to 4.4 percent and 45.2 percent up to 7.6 percent.