A new small business survey finds that 75% of small business owners agree that so many Americans are financially unprepared for retirement that it has reached crisis levels.
Nationwide Financial, Columbus, Ohio, published this finding in a summary of results from a new study. Conducted by Harris Interactive, New York, the survey polled 501 U.S. small business owners in the U.S. with 1-100 employees between August 9 and September 23, 2011.
The report finds that only one in five (19%) of small businesses offer their employees a 401(k) or other employee self-funded retirement plan.
The report adds that just 11% of small business owners say they are likely to add an employee sponsored 401(k) plan within the next two years. That’s because 69% say their business is too small. And more than half say that a 401(k) is too expensive.
However, 37% of small business owners with more than six employees say they are under pressure from employees to offer a retirement plan. Four in five (78%) of these owners surveyed say 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. “The provisions in the Small Businesses Add Value for Employees (SAVE) Act before Congress will remove many of the barriers that have kept small businesses from offering their employees a retirement plan.”
The SAVE Act encourages small businesses to pool together to offer Multiple Small Employer Plans (MSEP) that are less expensive than single employer plans and simplify an employer’s administrative requirements. H.B. 4742, sponsored by Ron Kind (D-WI) and David Reichert (R-WA), allows small employers to reduce costs by pooling their resources under a single plan with easier administrative requirements.
According to the survey, 71 percent of owners say that when selecting an employee self funded retirement savings plan it’s important that the plan has flexibility to match or not match employee contributions. And 62% say it’s important that multiple employers can group together to pool resources and reduce administration costs.
Four in five owners say when selecting a plan it’s important the plan has minimal administration requirements and can be offered at a low price. Three in four owners say it’s important that the plan can be converted to better meet their needs as their business grows.