Amid “The Great Resignation,” many companies are pulling out all the stops to attract and retain top talent. A strong 401(k) plan is one of the tools at their disposal—and one giant consulting firm is not afraid to use it.
Big Four accounting firm KPMG US recently announced that it is freezing contributions to its defined benefit pension plan and replacing its 401(k) match with an automatic firm contribution of up to 8% of W-2 pay—with no requirement that employees contribute to the plan.
“We will replace our current KPMG 401(k) match and pension programs with a single, automatic firm-funded contribution within the 401(k) plan equal to 6-8% of eligible W-2 pay.”
Paul Knopp, Chair and CEO, KPMG US
“We will replace our current KPMG 401(k) match and pension programs with a single, automatic firm-funded contribution within the 401k plan equal to 6-8% of eligible W-2 pay,” KPMG U.S. Chair and CEO Paul Knopp announced in late October via a LinkedIn post. “The new plan will feature market-leading flexibility as all employees will receive the contribution without any requirement to contribute their own money.”
This unique tweak to its 401(k) plan was one of several employee benefit innovations Knopp revealed in the post, with a two-pronged goal of giving employees the flexibility they need while helping to attract and retain top talent in today’s hyper-competitive labor market.
Employees are of course still encouraged to contribute to their own plans, but will get the company contribution regardless based on tenure. Employer contributions will vest after three years of service. KPMG’s 401(k) plan is estimated at $6 billion with approximately 44,600 participants, qualifying it as a “jumbo” plan.
Another big change Knopp announced was a 10% reduction in employee health care premiums in 2022, with no change in the benefit levels. The announcement said this represents a savings of 16% for health plan participants with health care inflation projected to be 6% next year.
Other enhancements to the benefits package include:
• Up to three weeks of additional paid caregiver leave, separate and apart from PTO
• All new parents will receive 12 weeks of paid parental leave
• Twice per year KPMG will take a firm-wide break, giving employees at least nine consecutive days to disconnect and spend time with family and friends.
“I believe part of my job is to build support systems that help our people when they need it most,” Knopp’s post said. “As a firm, we grow best when our people are growing too. And we’re committed to continuing to invest in KPMG’s extraordinary people—their careers, their future, their well-being and their families.”
401(k) change made within days of lawsuit
On Oct. 26, law firm Capozzi Adler PC filed an ERISA class-action lawsuit against KPMG on behalf of four former employees in U.S. District Court in the District of New Jersey, alleging that the company failed its 401k participants by selecting excessively expensive investment options and charged excessive administrative fees.
Plaintiffs allege in the suit that the KPMG plan’s total costs were “more than double” the costs associated with peer plans, and at least six plan funds underperformed cheaper alternatives.
The suit closely mirrors another recent excessive fee suit filed by Capozzi Adler against the 401k plan of Deloitte, also a Big Four accounting firm.
SEE ALSO:
• How Fiduciaries Can Help Protect Themselves from Excessive Fee Litigation
• 4 Key Steps Plan Sponsors Can Take to Guard Against 401k Lawsuits
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.
