Small business owners and their employees see the need for better retirement saving options.
A new small business survey by Nationwide Financial finds that 75 percent of small business owners agree that Americans’ lack of financial preparedness for retirement has reached crisis levels. However, only one in five of these businesses offer their employees a 401(k) or other employee self-funded retirement plan.
It seems few provide their employees access to an employer-sponsored 401(k) plan because small businesses need to reach “critical mass” to absorb the cost and administration of the plan. In fact, 69 percent of respondents to the survey say their business is too small to add a 401(k) plan and more than half say doing so is too expensive.
“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.”
Arvia said the SAVE Act legislation will aid small businesses and their employees by encouraging small businesses to pool together to offer less-expensive, simpler 401(k) plans, and it will extend to their employees important fiduciary protections that do not exist with other retirement accounts. It will also enable small businesses to easily transition to a traditional 401(k) retirement plan as the business matures.
“There’s a retirement crisis looming and we need to work together to improve access to retirement plans for all Americans,” said Arvia. “Nationwide strongly supports initiatives like the SAVE Act that will help increase the retirement security for all Americans.”
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