The average employer match is about 50 cents on the dollar for the first 6% of pay according to a 2009 study by Hewitt. If an employer decides to suspend its 401(k) match based on this average, it could save about $1,500 per employee each a year. A large company like Xerox could pocket approximately $25 million annually.
If there is an economic downturn coming (think 2008), companies will start to circle the wagons and cut unnecessary expenses - all in the name of glorious shareholder dividends and fat cat bonuses. Add the stock buyback to the mix and you can clearly see that nothing is going to the employees but to the upper echelon of directors and shareholders. Xerox is a ripe plum for the picking.
If the rumor is true, methinks that management wants to use the suspension of the 401K matching as a means of financing the severance payments as a "one-off" expense and then pocket the rest in the future years with a culled workforce.
Class action lawsuit anyone? If there is grounds for one.