At a recent employee meeting, the executive team was asked whether our 401(k) could be improved by offering matching funds. The answer was no, citing low plan participation. I feel like that's a little bit of a chicken-or-egg type of situation, because I have to imagine that enthusiasm would be higher with matching funds as incentive. What's sad is that our plan isn't terrible -- all administration fees are being paid at the company level and our investment choices are decent, including a handful of institutional index funds with deliciously-low expense ratios. Lack of matching is all that separates this plan from being brag-worthy.
I feel like that wasn't even an answer to the original question. It was a deflection. You answer no to the original question deflecting with a fact. Ultimately the executive team had no goal to improve the 401k plan with a loss. Even with a low participation the 401k could be improved by offering matching funds. Thankfully I wasnt at the employee meeting. I probably would have flipped my lid going off on the exec team and lost my job.
Agreed, this is a lie and the reason makes no sense. If the participation is low, that means the cost of adding a match is low, assuming many won't take advantage. It's not even a good excuse. You could even argue that participation would barely budge if they introduced it, so the cost won't be so bad.
My job only has a 1% match on the 403(b), but does provide a meager pension with no contribution from the employees. This is confusing for many people, who don't understand what a 403(b) is and don't want to find out, so I've found that many just are happy to have the pension and avoid adding anything to the 403(b) saying, "Well it's only 1%."
A co-worker about 15 years my senior, and who has been here over 20 years, told me he'd only ever contributed the minimum 1% a year since they introduced the match 10 years ago, and prior to that contributed nothing. Knowing his rough salary, he's MAYBE contributed $7K total in 20 years.
Which means in one year, I've contributed more than double what he has in two decades.