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Rockwell is in the process of cutting costs to help cope with an economy left behind by the pandemic. Coronavirus took a toll on the entire economy, but it came down on the oil & gas industry especially hard. According to S&P Global, Rockwell announced plans to cut an additional $1.6 billion in operating expenditures, making the total reduction $2.3 billion.
But what will be on the chopping block? Could Rockwell be the next corporation to suspend or reduce their company match program?
One of Rockwell’ major competitors, ExxonMobil, announced that it would stop matching corporate employee’s contributions to their retirement savings plans. To get a better idea of what an end to 401(k) Matching would look like, let’s use them as an example. Earlier this year, ExxonMobil sent a mass email to its employees alerting them that the company match would be suspended indefinitely. The suspension of these benefits officially began on October 1st, 2020. According to Reuters, ExxonMobil has now experienced “its first back-to-back quarterly loss in 36 years because of the drop in demand during the novel coronavirus pandemic.”
ExxonMobil has two savings plans available to corporate employees. The first is the U.S. ExxonMobil Savings Plan (EMSP) and the second is the U.S. Supplement Savings Plan (SSP). The company was matching a 6% minimum employee contribution with 7% of the participant’s pay. These match programs will be reinstated beginning on October 1st, according to Reuters.
There has been a consistent economic trend showing that corporations will decrease or suspend benefits when a recession strikes. We witnessed this in the 2001 recession when General Motors, Charles Schwab, Goodyear Tire & Rubber, and Ford, all decreased or suspended their company match programs. The same happened in 2008, with Forbes reporting that nearly 20% of companies with over 1,000 employees reduced or suspended 401(k) contributions. Unfortunately, that trend seems to be continuing in the wake of the current recession brought on by the Coronavirus pandemic. According to Market Watch, 16 major companies have suspended their 401(k) matching programs last year including Amtrak, Marriott Vacations Worldwide, and Tenet Health. General Electric & Lockheed Martin also made big news with their announcements to cut benefits in 2019. There have even been rumors of AT&T cutting benefits to hit their target goal of $10 billion in cost cuts.
When benefits are frozen, employees in the mid to late portion of their career are usually hurt the most. If Rockwell' match program does end, it’s a good idea to calculate exactly how much this will affect your retirement savings plan. Forbes recommends maintaining your retirement contributions and even increasing them if you have the funds. This can help compensate for the loss of benefits.
For more information regarding Rockwell' 401(k) matching program, contact your HR department.
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Sources:
“UPDATE: Rockwell Cuts 2020 Capex Again by $1.6B, Curtails Production | S&P Global Market Intelligence.” Essential Intelligence to Make Decisions with Conviction | S&P Global, 16 Apr. 2020, https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/update-Rockwell-cuts-2020-capex-again-by-1-6b-curtails-production-58062763.
Tretina, Kat. “What To Do If Your Employer Suspends 401(k) Matching Contributions.” Forbes, Forbes, 10 Apr. 2020, https://www.forbes.com/sites/advisor/2020/04/10/covid-19-employers-suspending-401k-matching-contributions/#7a48068b285f.
“The Retirement/Transition Guide for Rockwell Employees.” The Retirement Group, The Retirement Group, 11 Aug. 2020, https://energy.theretirementgroup.com/conoco-phillips-educate
Business, Matt Egan, CNN. “Verizon’s Alternative to Layoffs: Retraining 20,000 Workers – CNN.” CNN, CNN, 14 July 2020, https://www.cnn.com/2020/07/14/business/verizon-jobs-ceo-hans-vestberg/index.html.
Blanton, Kimberly. “More Cuts to 401(k) Matches Are Coming – MarketWatch.” MarketWatch, MarketWatch, 6 Aug. 2020, https://www.marketwatch.com/story/more-cuts-to-401k-matches-are-coming-2020-04-16.
Kelly, Jack. “Companies In Their Cost Cutting Are Discriminating Against Older Workers.” Forbes, Forbes, 3 Aug. 2020,
Noe, Eric. “After Verizon, Are Pension Freezes on the Way? – ABC News.” ABC News, ABC News, 16 Dec. 2005, https://abcnews.go.com/Business/story?id=1378711.
https://www.forbes.com/sites/jackkelly/2020/08/03/companies-in-their-cost-cutting-are-discriminating-against-older-workers/#72017abd4436.
“Pension Lump-Sum Payment Windows Are Back.” The Retirement Group, The Retirement Group, 11 Aug. 2020, https://retirekit.theretirementgroup.com/pension-lump-sum-payment-windows-are-back-e-brochure
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What retirement planning resources are available to employees of Rockwell Automation that can assist them in understanding their benefits upon retirement, specifically regarding the Pension Plan and Retirement Savings Plan? Discuss how Rockwell Automation provides these resources and the potential impact on an employee's financial security in retirement.
Retirement Planning Resources: Rockwell Automation provides several retirement planning resources to aid employees in understanding their Pension Plan and Retirement Savings Plan benefits. The company offers access to a pension calculator and detailed plan descriptions through their benefits portal. Additionally, employees can seek personalized advice from Edelman Financial Engines, which can guide on Social Security, pensions, and 401(k) management. These tools collectively help in maximizing retirement income, ensuring financial security.
In what ways does Rockwell Automation support employees who are transitioning to retirement to find appropriate health coverage, particularly for those who may be eligible for Medicare? Explore the relationship between Rockwell Automation's healthcare offerings and external resources like Via Benefits and how they assist retirees in navigating their healthcare options.
Health Coverage for Retiring Employees: Rockwell Automation supports transitioning employees by offering pre-65 retiree medical coverage and facilitating access to Via Benefits for those eligible for Medicare. This linkage ensures continuous healthcare coverage and aids retirees in navigating their options effectively. Via Benefits provides a platform to compare and select Medicare supplement plans, ensuring that retirees find coverage that best fits their medical and financial needs.
How does the retirement process affect the life insurance benefits that employees of Rockwell Automation currently hold? Investigate the various options available to retiring employees regarding their life insurance policies and the importance of planning for these changes to ensure adequate coverage post-retirement.
Life Insurance Benefits: Upon retirement, life insurance coverage through Rockwell Automation ends, but employees have options to convert or port their policies. This transition plan allows retirees to maintain necessary coverage and adapt their life insurance plans to meet their changing financial and familial obligations post-retirement, thus ensuring continued protection.
What considerations should Rockwell Automation employees take into account when planning the timing of their pension benefit elections, and how can this timing affect their retirement income? Discuss the implications of pension benefit timing on financial planning and the suggested practices by Rockwell Automation for making these decisions.
Pension Benefit Election Timing: The timing of pension benefit elections can significantly impact retirement income. Rockwell Automation provides resources to model different retirement scenarios using their pension calculator. Employees are advised to consider the timing of benefit elections carefully, as early or delayed starts impact the financial outcome, thereby affecting overall financial stability in retirement.
How can employees of Rockwell Automation estimate their Social Security benefits before retirement, and what tools or resources does Rockwell Automation provide to aid in this process? Delve into the importance of understanding Social Security benefits as part of an overall retirement strategy and how Rockwell Automation facilitates this understanding.
Estimating Social Security Benefits: Employees are encouraged to use resources provided by Rockwell Automation to estimate their Social Security benefits. The company offers tools and external advisory services, including consultations with Edelman Financial Engines through the company’s portal, which help in understanding how Social Security benefits integrate with other retirement income sources for a comprehensive retirement strategy.
What are the health care options available to Rockwell Automation employees who retire before reaching the age of 65, and how do these options differ from those available to employees who retire after age 65? Discuss the eligibility requirements and implications of choosing, or deferring, retiree medical coverage under Rockwell Automation's plans.
Health Care Options for Employees Retiring Before Age 65: Rockwell Automation offers distinct health care plans for employees retiring before age 65, with eligibility dependent on age and years of service. These plans provide substantial support by covering different medical needs until the retiree is eligible for Medicare, illustrating the company’s commitment to ensuring health coverage continuity for its workforce.
In what ways can Rockwell Automation employees effectively prepare for potential cash flow gaps when transitioning into retirement? Evaluate the financial planning strategies recommended by Rockwell Automation to minimize the stress associated with income disruption during this critical period.
Preparing for Cash Flow Gaps: Rockwell Automation addresses potential cash flow gaps during retirement transition through detailed planning resources. The company highlights the importance of budgeting and provides tools to estimate the timing and amounts of retirement benefits. This proactive approach helps employees manage their finances effectively during the transitional phase of retirement.
What resources does Rockwell Automation offer to help employees make informed decisions regarding their retirement income sources, including pensions, savings plans, and Social Security? Examine the tools and guidance supplied by the company and how these can impact the employee's financial readiness for retirement.
Informed Decisions on Retirement Income Sources: Rockwell Automation offers extensive resources, including workshops and personalized counseling through partners like Edelman Financial Engines, to help employees make informed decisions about their retirement income sources. This support is crucial in helping employees optimize their income streams from pensions, savings plans, and Social Security.
How do Rockwell Automation's retirement benefits differ based on an employee's years of service, and what implications do these differences have for planning a secure retirement? Analyze the various tiers of benefits and options available to long-term versus newer employees and the importance of understanding these differences.
Impact of Service Years on Retirement Benefits: The company’s retirement benefits vary with the length of service, affecting the retirement planning of both long-term and newer employees. This tiered benefit structure underscores the importance of understanding how service length impacts pension calculations and eligibility for other retirement benefits, guiding employees in their long-term financial planning.
How can employees contact Rockwell Automation to seek further information about the retirement benefits discussed in the retirement document? Specify the available channels for communication and the types of inquiries that can be addressed through these means, underscoring the company's commitment to supporting employees during the retirement process.
Seeking Further Information: Employees can contact the Rockwell Automation Service Center for further information about retirement benefits. The availability of detailed plan descriptions and direct access to retirement specialists via phone ensures that employees receive support tailored to their specific retirement planning needs, reinforcing the company's commitment to facilitating a smooth transition to retirement.
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