Like millions of her peers, my daughter graduated from college last weekend and I'm already nagging her about participating in the 401(k) plan at the university where she's working as a research assistant until she starts grad school. Needless to say, she's rolling her eyes at my nagging.
It amazes me that job hunters don't evaluate their future employer's retirement plans. While I understand that many young people are happy to have ANY job in this stinky economy -- as Arianna Huffington pointed out, the unemployment rate for those age 16 to 24 is more than 18% -- if you have a choice you should make "deferred compensation" as high a priority as the size of your paycheck. As I've pointed out in previous posts, the vast majority of 401(k) participants will have to stay on the job AT LEAST another 10 years beyond the normal retirement age because of the typical puny 3% employer matching contribution, the second lowest in the advanced world, a necessity that's not disclosed to them.
This week I had hoped to launch the first annual Best 401(k) list, citing those employers who make generous 401(k) matching contributions. Unfortunately, when I asked a company that rates retirement plans to come up with some data, I learned that many of their findings were inaccurate. And I couldn't research this because while employers who offer these plans are required to file Form 5500s in order to comply with the Employee Retirement Income Security Act and there's a website called Free-Erisa.com where these forms can be found, the generosity of the plans isn't in the form but in the "auditor's report," which isn't on Free-ERISA.com.
Unfortunately, the best I could do was fact-check a handful of "Fortune 50" companies and it appears that none of America's richest companies contribute the equivalent of 9% of pay as every employer except the self-employed are required to do in Australia. Here goes: Chevron offers a dollar per dollar match, up to 8% of pay, for Marathon and Exxon Mobil the match is 7%, and for IBM and Citibank it's 6%. (I disqualified any company whose matching contributions are made in company stock).
If you think that newer high-tech companies are more generous, think again. When I contacted Apple and Google, which have been known to lure programmers with generous paychecks, media representatives at Apple didn't return my calls and a Google spokesperson said it was "unable to participate." So I found out Google's benefits myself by -- surprise, surprise -- googling "Google" and "benefits" and finding out that their 401(k) plan features the typical measly 50% matching contribution up to 6% of compensation (a similar search for Apple's plan didn't turn up anything.)
Google CEO Sergey Brin should realize if he wants to attract more future Sergeys he ought to offer them the deferred compensation they deserve, not just gyms, laundry rooms and massage parlors. If Google and other frugal companies aren't willing to offer adequate retirement plans, they ought to be required to make their stinginess public so that prospective and current employees can look elsewhere.