HomeWinBuzzer NewsMicrosoft Boosts Contribution to 401k Plans to Help Valuable Employees Save

Microsoft Boosts Contribution to 401k Plans to Help Valuable Employees Save

Microsoft began matching half of its employee's contributions to 401k plans in 2016, and has seen significant results since. The $150 million increase has resulted in a 16% increase in workers that contribute the maximum amount.


has joined a number of other companies in boosting its 401k plans. For those unfamiliar, the program encourages employees to add pre-tax earning to the savings, and employers can choose to add an optional contribution to persuade them further.

Despite this, many workers still aren't saving enough, and Microsoft has tried to address this in various ways. Three years ago, it raised the employee contribution options from 6, 8 and 10 percent to 8, 10 and 12 percent.

Unfortunately, that didn't seem to have a large impact. Instead, in 2016, the company began matching half of employees contributions. Of course, this is subject to government limits – namely, the amount added to an individual employees plan. However, initial results show great success.

According to the The Wall Street Journal, an extra $150 million was put into Microsoft's $17 billion retirement savings program. As a result, 52% of employees are now contributing the maximum about of pre-tax money. In 2015, that number was at just 36%.

Though the extra spending is significant, it does seem to be having a positive effect on employees, which was the goal. The hope is that high-quality workers will retire on time, reducing health care costs and ensuring young blood can replace them in a timely fashion.

Following General Trends

Microsoft's growing contributions seem to be line with a general rise across the workforce. According to mutual fund company Vanguard Group, average company contribution rose to 4.7% of employee salaries in 2016.

The data comes from 1,900 workplace retirement programs and is the biggest year-to-year rise since 2007. For context, 2015 had a contribution of 3.9% of employee salaries.

“If you want people to retire at a certain time they need to have acquired sufficient assets,” Vanguard senior research analyst Jean Young. “There's a growing interest among some employers in supporting that dynamic.”

No doubt Microsoft's workers are glad for the increase. Xbox senior software engineer Francois Burianek has raised his contributions by over 70%, saying, “It's a no-brainer to try and max that out as much as possible.”

Ryan Maskell
Ryan Maskellhttps://ryanmaskell.co.uk
Ryan has had a passion for gaming and technology since early childhood. Fusing the skills from his Creative Writing and Publishing degree with profound technical knowledge, he enjoys covering news about Microsoft. As an avid writer, he is also working on his debut novel.

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