“401k” is an American term of art. It’s like a pension fund except you’re directly investing into the stock market and not pooling risk with anyone else. Money contributed to a 401k isn’t taxed until you retire, but in exchange you can only contribute direct earnings from the job sponsoring your account.
As part of a benefits package, some employers also offer contribution “matching”. It’s very similar to the concept of employers matching charitable donations – for every personal dollar you put in, they chip in as well. How much they contribute will also vary. Some places will do dollar-for-dollar matching up to a maximum salary percentage (e.g.: If I earn $50k and get 5% matching, the employer will match the first $2500 I contribute). Other companies will instead contribute pennies on the dollar at a fixed percentage rate (e.g.: If I save the annual maximum of $22,500 and get 5% matching, the employer will contribute $1,125). And yes – it’s never a pleasant surprise when you’re expecting the good matching and instead get the shitty matching.
In any case, because 401k matching is technically only a job benefit, there aren’t many rules against employers reneging on it. It’s one of the first corners that tend to get cut in workplaces where the boss doesn’t have to look their underlings in the eye on a regular basis.
Surely actual pension contributions would be better than having your employer partially fund what is essentially a big financial gamble?
Or… Is that the idea? Another way for US employers to screw their fellow citizens over and give them as little as possible in return for their lives of labour?
The world just makes me sadder and sadder. There’s just no real good news any more, only bad :-(
Can’t tell if sarcasm. It’s a retirement plan that employers will match up until a certain point, In lieu of the pension plans previous generations were offered.
No, I was being genuine. We have compulsory superannuation here in Aus. Employers pay in an amount equal to 11% of your wages, it goes up to 12% in 2025. It applies to every wage earner, full-time, part-time, contract and casuals.
