One of the world’s largest corporations by revenue is planning to suspend the employer match to its 401k plan beginning in early October, as Reuters reported Aug. 4 that Exxon Mobil Corp. told employees of the move on Tuesday.
Sources inside the company provided Reuters with a copy of the internal message, which said, in part:
“Given the current business environment, the corporation is taking steps to reduce costs. The company intends to suspend the company match contribution to the U.S. Exxon Mobil Savings Plan for all employees covered by the Savings Plan, effective around Oct. 1, 2020. As business conditions continue to evolve, company match contributions to the savings plan will be reassessed.”
At Exxon’s Baytown, Texas, refinery and chemical plant, the United Steelworkers (USW) local union plans file a demand to negotiate over the change in the savings plan, four sources familiar with the matter told Reuters. The company has not yet commented publicly about suspending the match.
Recent industry research says about 10%-12% of plan sponsors have suspended 401k matching contributions so far due to the pandemic, and nearly a quarter of companies are either planning to or considering suspending their match this year.
The Reuters piece said that under the U.S. Exxon Mobil Savings Plan, the company matches a 6% contribution by an employee with a contribution equal to 7% of the employee’s pay.
According to BrightScope, the Exxon Mobil Savings Plan, administered by Voya Financial, is a defined contribution plan with a profit-sharing component, stock bonus component, 401k feature, and ESOP component.
The plan has a BrightScope Rating of 88, placing it in the top 15% of all plans in its peer group. This plan is also in the top 15% of plans for Account Balances, Company Generosity, Salary Deferral, and Total Plan Cost.
BrightScope shows Exxon Mobil Savings Plan with currently over 43,100 active participants, an average account balance of $420,000 and over $17.5 billion in plan assets.
Bloomberg ranked the top 401k plans of the top 50 companies in the S&P 500 based on the generosity of their plans for a new hire. The Exxon Mobil Savings Plan ranked 21st with a score of 64 while ConocoPhillips ranked first with a score of 85.
On July 31, Irving, Texas-based Exxon Mobil announced an estimated second quarter 2020 loss of $1.1 billion, or $0.26 per share assuming dilution, driven by global oversupply and COVID-related demand impacts.
“The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes. We responded decisively by reducing near-term spending and continuing work to improve efficiency by leveraging recent reorganizations,” said Darren W. Woods, chairman and CEO. “The progress we’ve made to date gives us confidence that we will meet or exceed our cost-reduction targets for 2020 and provides a strong foundation for further efficiencies.”
Back in April, the company announced an effort to trim its U.S. workforce by as much as 10% and a $10 billion scale-back in capital outlays as the black swan event of a global pandemic crippled energy demand.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
