In a memo to employees, Sears interim CEO Bruce Johnson said the declining economy has forced the company to make “many tough business decisions.”
Currently, Sears matches 100 percent of employees’ salary deferrals up to the first 3 percent of pay and 50 percent of employees’ pretax contributions on the next 2 percent of pay.
The suspension of the 401(k) plan match, which takes effect January 31, is the third major change that Sears has made to its retirement savings program in recent years.
In 2005, Sears stopped offering its defined-benefit plan to new employees and employees under age 40. Employees 40 and older were given the choice of continuing to earn benefits in the defined-benefit plan or opting into a newly enhanced 401(k) plan.
In 2006, the defined-benefit plan was completely frozen, with all future retirement savings benefits provided through the 401(k) plan.
The suspension of Sears’ 401(k) plan match comes at a time of declining earnings. For the 13-week period ended November 1, Sears reported a net loss of $146 million on $10.7 billion in revenue. For the comparable period a year earlier, Hoffman Estates, Illinois-based Sears reported $4 million in net income on revenue of $11.6 billion.
Sears joins a growing list of major corporations—including FedEx Corp. of Memphis, Tennessee; GenCorp Inc. of Sacramento, California; MediaNews Group Inc. of Denver; and Motorola Inc. of Schaumburg, Illinois—that in recent weeks have announced suspensions of 401(k) plan matching contributions.
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