Small business owners trust financial services sector on retirement plans
Business owners were more likely to favor retirement plan providers over other entities, a study has found.
When compared with the public sector or associations, the financial services sector is “overwhelmingly” trusted more for its expertise in administering financial assets and retirement savings programs by small business owners.
That’s according to a recent survey sponsored by the SPARK Institute and conducted by Cerulli Associates, which found that in ranking third parties, including local or state government, associations such as the U.S. Chamber of Commerce and large financial services firms, respondents favored retirement plan providers instead of state and government entities for administering retirement plans.
The report said that 89 percent, of respondents indicate a high level of trust in retirement plan providers, compared to 53 percent for state governments.
But different types of plans can appeal to employers “at different stages of their growth,” the report cites Tim Rouse, executive director of the SPARK Institute, saying.
Rouse adds, “Our findings show that the proposed coverage solutions are not mutually exclusive,” with “[s]tate-run programs, MEPs, and individual plans all hav[ing] appealing qualities to employers” depending on their size. He concludes, “An effective retirement system provides alternatives to U.S. employers and gives them the ability to move easily from one program to the other as their workforce changes and evolves.”
The research also sought to learn about employer knowledge of state-run programs, such as those in California and Oregon.
While properly structured state-run programs can be cost effective and simple for employers to administer, it points out, as well as having the law to back up mandatory coverage, they “offer limited savings capabilities and raise concerns about uniformity from one state to the next.”
Then there are multiple employer plans, which can also provide simplified administration and lower costs for smaller employers while providing higher savings rates. However, employers have to take on the fiduciary duty to select and monitor the MEP.
Finally, there are individual plans, such as 401(k)s, which allow millions of Americans to save. Although they bring with them higher levels of employer responsibility and fiduciary duties, such plans also allow employers to customize for employees as well as helping to achieve organizational and employee benefits goals, such as talent recruitment and retention. In addition, they help to be sure that employees can transition to retirement when they want. READ MORE:
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