Amazon can’t catch a break. The next-gen retail giant recently came under fire for its alleged troubling work environment. Now, Bloomberg reports on its stingy and risky 401(k).
With images of Enron still dancing in our heads, the news service reports that “The match of employee contributions into their 401(k) plans is below average and made entirely in Amazon stock, which leaves employees dangerously exposed to the company’s fortunes. In fact, Amazon’s 401(k) came last in Bloomberg’s ranking of the plans offered by the top 50 companies in the S&P 500.”
Bloomberg notes that the general trend in this group has been to move away from matching employee contributions with stock. Part of the reason stretches back to the collapse of the aforementioned Enron, which saw fortunes and lifesavings lost in the energy giant’s demise.
“Amazon’s match is also less generous [than Silicon Valley peers] in dollar terms,” Bloomberg adds. “If Amazon matched employee retirement contributions in cash, a new employee earning $80,000 a year would get a maximum company contribution of $1,600. Someone earning that same pay at Apple, Oracle, or Microsoft, by contrast, would get a maximum contribution of $2,400 in her first year. At Facebook, the company contribution would be $2,800.”
What’s more, there’s evidence that participation rates among lower-paid workers are small in Amazon’s 401(k) plan—and that creates discrimination-testing issues for higher earners at the online retailer.
As the news service notes, “the New York Times investigation into Amazon’s high-stress office environment included details about high turnover among the white-collar workforce, although without providing statistics. Attrition would also deal employees out of the retirement plan. Amazon workers who join full time must stay for three years before they vest in the company match. Leave after two years and 11 months? You’re out of luck.”