Voros: 401(k) change may create new lost generation

LOST in the news reports of job losses, foreclosures, government bailouts, bank failures and Wall Street bankruptcies is a growing trend among companies that could have more long-term damage than any of the country's recent financial problems.
In fact, it may be 10 or 20 years before we can truly assess the consequences of cash-strapped employers dropping their 401(k) matching contributions to employees.
While the move is cast as a temporary interruption of a key employee benefit that will be reconsidered annually, do not expect this spigot to be turned on anytime soon.
For many employees in a company-sponsored 401(k) plan designed to provide for retirement, a typical matching contribution is 50 cents per $1, up to 6 percent of the employee's contribution.
This built-in hedge is touted to employees as "free money'' and a key reason to join a company's 401(k) plan. The loss of that matching contribution could have unintended consequences. Seeing their own company retreat from the 401(k) model could motivate employees, especially younger ones, to do the same, especially in this bear market.
Compounding the problem, workers will save less, whether they stick to the plan or not, because the loss of the matching funds will mean they will have less money to buy stocks, which will be at historic discounts this year.