ConocoPhillips 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, ConocoPhillips 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 ConocoPhillips be the next corporation to suspend or reduce their company match program?
One of ConocoPhillips’ 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 ConocoPhillips' 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 ConocoPhillips' 401(k) matching program, contact your HR department.
Sources:
“UPDATE: ConocoPhillips 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-conocophillips-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 ConocoPhillips Employees.” The Retirement Group, The Retirement Group, 11 Aug. 2020, https://energy.theretirementgroup.com/conoco-phillips-educate
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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
https://www.reuters.com/business/energy/exxon-plans-reinstate-employer-401k-match-oct-1-2021-07-02/
