Seventy-five percent of small business owners polled in a recent survey said they agree that most American workers are financially unprepared for retirement, but only one in five small businesses offer their employees a 401(k) or other employee self-funded retirement plan.
The Nationwide Financial/Harris Poll of 501 small business owners also found that only 11 percent of respondents plan to add an employee-sponsored 401(k) plan within the next two years. Sixty-nine percent say their business is too small and more than half say it is too expensive.
Thirty-seven percent of the business owners surveyed, who have at least six employees, said they are under pressure from employees to offer a retirement plan, and 78 percent said that having a retirement plan is effective in attracting qualified employees.
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"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," said 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 that are less expensive than single employer plans and simplify an employer's administrative requirements. The bill, which was introduced in the house by Ron Kind, D-Wisconsin, and David Reichert, R-Washington, would allow small employers to reduce costs by pooling their resources under a single plan with easier administrative requirements.
Seventy-one percent of those surveyed said that when selecting an employee self-funded retirement savings plan it is important that the plan have flexibility to match or not match employee contributions and 62 percent said it was important that multiple employers be able to group together to pool resources and reduce administrative costs.
"The SAVE Act is an important step toward improving the lives of American workers who don't have access to an employer-based retirement plan," said Arvia.
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