Read excerpt below:

January 12, 2009
Retirement Income Reporter
OnWallSttreet

The growing number of plan sponsors that are suspending employee 401(k) matches or freezing defined benefit plans is a disturbing trend that could dissuade new employees from participating in their company's retirement programs in the future.

This assessment was made by James Cornell, vice president, Prudential Retirement, at a press briefing held in New York on Tuesday by Prudential Retirement and Quantitative Management Associates (QMA) to discuss the economic outlook. Cornell, who said the economic crisis has "shocked the retirement system," is afraid the dissuasion could be especially harmful to those whose participation in company retirement programs is vitally important, such as young employees and minorities.

He also warned against employees resorting to "reckless conservatism"-a play on former Fed Chairman Alan Greenspan's "irrational exuberance" remark-by moving all of their 401(k) investments out of equities and into overly-conservative investments. Perhaps most disturbing, according to Cornell, is that Prudential's research has shown a growing number of employees that have stopped contributing to their 401(k).

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