The coronavirus pandemic hasn't just gutted small businesses, it's also decimated their retirement savings plans for employees.
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That's according to a study released Tuesday by Ascensus, which found the money going into employer-sponsored retirement plans has plunged as a result of layoffs and business losses that forced some companies to reduce, or stop, their contributions.
The drop was most pronounced at small firms and hit those employees the hardest, Ascensus, which does record-keeping and administration for corporate retirement plans, said.
From March through May, employer contributions declined 11.4 percent for several reasons, including business closures, interruptions and layoffs.
While just 1.4 percent of employers stopped matches altogether, plans with 25 or fewer participants were five times more likely to stop than those with more than 100 participants.
A majority of workers who kept their jobs during the crisis -- 93.1 percent -- continued to contribute to their retirement plan at the same rate. Only 11.8 percent of workers said they were experiencing too much financial hardship that they had to decrease or stop their matches.
Under the massive relief package signed by Congress at the end of March, employers had the option of making penalty-free early distributions from savings plans to workers who were sick or suffered financially during the pandemic.
But just 35.1 percent of the company-sponsored plans with more than 100 employees offered that option to workers. Only 3.8 percent of plans with 25 or fewer participants offered the perk.
The outbreak, and subsequent economic lockdown, dragged the country in the worst downturn in nearly a century. In the span of two months, unemployment skyrocketed from a 50-year low to a 90-year high. The pandemic has also been a catalyst for bankruptcies among small and big businesses alike, and economists have warned of an unprecedented contraction in the nation's GDP in the second quarter,