Nearly a third of small employers don't offer retirement benefits, and just 22 percent in that group are giving any thought to starting to do so soon.
A report by Transamerica Center for Retirement Studies compared large and small companies to see just how different their retirement offerings are and found that, even if small employers do offer some sort of workplace plan, they don't offer the same amount of options within their plans.
With many in Washington talking about a retirement crisis in America, many policymakers have been looking for ways to help Americans do a better job of saving for their futures. One way is to encourage "micro" companies, those with fewer than 99 employees, to offer plans, and to get large plans to begin offering retirement benefits to their part-time workers, Transamerica said.
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The report found that 72 percent of small companies do offer a plan, including 71 percent of these so-called micro companies and 89 percent of companies with between 100 and 499 employees.
Only 58 percent of small-company workers report having access to a 401(k) or similar plan. Much of this gap in retirement benefits can be explained by the prevalence of part-time workers who are not offered benefits. The coverage gap between part-timers and full-time workers is present among companies of all sizes, but is more pronounced among small companies.
Among the 28 percent of small companies that say they don't offer retirement benefits, only 22 percent said they are "very" or "somewhat" likely to offer a plan in the next two years. They cite cost, company size and a difficult business environment as the main reasons for not offering these benefits.
Lack of interest and concerns about administrative complexity and fiduciary liability also are factors.
Nearly one-third said they would be interested in joining a multiple employer plan offered by a vendor who handles many of the fiduciary and administrative duties at a reasonable cost.
When it comes to the features offered within retirement plans, 70 percent of small companies and 86 percent of large companies offer an employer match. In recent years, particularly right after the recession hit, many employers dropped their matching contributions. This year's Transamerica survey found that 14 percent of small companies had reduced or suspended their match since the recession began but 6 percent of them reinstated their match.
Both large and small companies offer some form of investment guidance as part of their defined contribution plan, but small companies are much less likely to offer hybrid funds, such as target-date funds, lifecycle funds or strategic allocation funds, the report found.
Small companies also are less likely than large companies to offer features such as automatic enrollment or Roth 401(k)s.
More than half of workers at small companies are confident they will be able to retire comfortably, but 59 percent said they plan to work past age 65 or they do not plan to retire. This expectation is shared among workers of all company sizes.
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