Not only have many entities reinstated matching contributions they suspended last year during the pandemic as cost-saving measures; some are even providing lump-sum payments to cover at least some of the contributions they missed out on during the suspension.
Case in point? Duke University, which recently announced that it will provide a lump-sum contribution to its 403(b) Faculty and Staff Retirement Plan participant accounts valued at the contributions they would have received from Jan. 1, 2021 through June 30, 2021, in addition to restoring employer contributions effective July 1, 2021.
Back in May 2020, Duke announced that it would temporarily suspend contributions to the plan from July 1, 2020, through June 30, 2021 as a cost-cutting measure to mitigate losses in revenue due to the coronavirus pandemic.
In March 2021, Durham, N.C.-based Duke University announced that the employer contribution for eligible employees would restart beginning July 1 as originally planned, but added more “good news” in a memo distributed to eligible faculty and staff on June 17.
“The cost savings efforts, strong investment returns and generous donor support that we have seen over the past year have made it possible for Duke to restore the employer contribution retroactive to January 1, 2021,” the memo stated.
Effective July 1, Duke will contribute 8.9% of a participant’s annual salary up to $69,400, and 13.2% of annual salaries more than $69,400 and up to $290,000.
An example listed on the Duke human resources website illustrates that an eligible participant who earns $7,088.33 monthly ($85,000 annually) can expect to receive a Duke contribution of $686.32 on a monthly basis. That’s 8.9% or $514.72 on the first $5,783.33 of salary and 13.2% or $171.60 on the remaining $1,300 of salary, to equal the $686.32 monthly employer contribution.
Duke’s 403b Faculty and Staff Retirement Plan has a BrightScope Rating of 70, with more than 66,400 active participants, an average account balance of $140,000 and over $6.9 billion in plan assets.
Duke’s plan was rated well below that of peer group plans from Yale (87.7), New York University (87.5) and Stanford (84.2), largely due to participation rates, according to BrightScope.
A Dec. 2020 Plan Sponsor Council of America (PSCA) snapshot survey, sponsored by Principal Financial Group, found nearly a third of higher education institutions say they either had or planned to reduce or suspend contributions to their 403b plans due to the pandemic.
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