A majority of surveyed chief financial officers and finance executives expect the tightening labor market and new cash reserves resulting from a slashed corporate tax rate to lead to more wage increase by the end of the year.
Two-thirds of 127 senior executives surveyed by Prudential and CFO Research said they expect further wage increases.
Some considerable portion of those expected increases would benefit retirement savers. Over half of the executives—57 percent—expect to increase matches to 401(k) plans.
The Tax Cuts and Jobs Act, passed on a party line vote in the Senate and signed into law last December, cut the corporate tax rate from 35 percent to 21 percent and allowed for full expensing of investments in business equipment.
In the ensuing months, many prominent firms announced one-time bonuses, increases in pay for lower-wage hourly workers, increases in 401(k) matches, and additional discretionary contributions to defined benefit plans.
According to the White House’s Council of Economic Advisers, almost 500 firms had announced bonuses or pay increases by April 8, affecting more than 5.5 million workers.
Other companies announced increased matches to 401(k) plans.
“We’ve seen client companies take advantage of the new tax law by providing employees with increased retirement benefits,” said Michael Knowling, Prudential Retirement’s head of client relations in a statement.
Cigna, the fifth largest health insurance payer in the country by revenue that covers 15 million subscribers, announced a permanent increase in its company match by 1 percent for its 30,000 employees. Cigna sold its retirement business to Prudential in 2003. Prudential Retirement is the record keeper for Cigna’s $5 billion 401(k) plan.