Though many small business owners say American workers are not financially prepared for retirement, only a small percentage offers retirement assistance, according to the results of a recent survey commissioned by Columbus-based Nationwide Financial.
In fact, 75 percent of the 501 small business owners surveyed claim that so many Americans are financially unprepared for retirement that the problem has reached crisis levels. However, just one in five, or 19 percent, of those businesses offer their employees a 401(k) or other employee self-funded retirement plan.
Only 11 percent of those surveyed say they are likely to add an employee sponsored 401(k) plan within the next two years. That’s because 69 percent say their business is too small and more than half say doing so is too expensive.
Additionally, 37 percent of respondents with more than six employees say they are under pressure from employees to offer a retirement plan.
Just because they aren’t caving to the pressure doesn’t mean those business owners aren’t aware of the benefits associated with offering a retirement plan. Four in five, or 78 percent, of them contend that having a retirement plan is effective in helping to attract qualified employees.
“Our survey found that nearly half, 46 percent, of small business owners were not aware or were unsure that an employee self-funded retirement plan could be offered without having to match employee contributions,” says Anne Arvia, senior vice president of retirement plans for Nationwide Financial, adding that provisions in the Small Businesses Add Value for Employees Act before Congress will remove many of the barriers that have kept small businesses from offering their employees a retirement plan.
The SAVE Act, or HB4742, sponsored by Ron Kind (D-WI) and David Reichert (R-WA), would allow small employers to reduce costs by pooling their resources under a single plan with easier administrative requirements.
That said, the SAVE Act is likely to appeal to the survey’s respondents, as 71 percent of them say it’s important for a self-funded employee plan to be flexibile where employer matches are concerned and 62 percent say it’s important that multiple employers can join together to reduce administration costs.
Four in five of those surveyed say it’s important for a plan to have a minimal amount of administration requirements and be offered at a low price. Three in four respondents say it’s important that the plan can be converted to better meet their needs as their business grows.
“There’s a retirement crisis looming and we need to work together to improve access to retirement plans for all Americans,” Arvia says. “Nationwide strongly supports initiatives like the SAVE Act that will help increase the retirement security for all Americans.”
On behalf of Nationwide Financial, Harris Interactive Inc. conducted 501 online interviews with small business owners in the United States, with 1 to 100 employees surveyed between Aug. 9 and Sept. 23. Results are weighted to be representative of U.S. companies with 1 to 100 employees with respect to number of employees.
