Employers are concerned about auto-enrollment overreach, state-run plans, and 401(k) costs. They’re just a few of the findings from a recent focus group conducted by Pew Charitable Trusts. The answers were surprising—to say the least.
Participants were asked questions intended to elicit their thoughts on the motivations and challenges in offering a plan, their perspectives on new state-level policies, and their views on specific plan features to encourage savings.
Among the conclusions:
- When asked about state proposals to set up automatic payroll deposit IRAs for private sector workers, the majority of employers expressed concerns about states’ administrative capabilities and questioned the motives for such plans. Still, some business representatives without plans said they would be willing to take on disseminating information to employees and facilitating contributions if it meant improving workers’ financial futures.
- Many employers said they thought workers might opt out of state-based auto-IRAs because of distrust of state-affiliated savings programs, limited incomes, or tight household budgets. Younger workers also might not take part because their focus is not on retirement needs, some said. Employers who offer retirement benefits said they would not drop plans if a state program were available to employees.
- Most employers reacted negatively to proposals to use automatic savings features. Though a small group saw benefits to the general idea of automatically enrolling employees, most argued that such a feature would be an overreach by employers who adopt it and many did not see the ability to opt out as a meaningful option for employees. None of the participants offering plans said they automatically escalate contributions; that concept had less support than auto-enrollment among employers with and without plans.
- Participants said creating a state-approved online marketplace for private firms to offer plans to small employers would be redundant because existing internet-based tools are available.
- Employers without retirement plans said they saw multiple challenges with the prospect of offering one, including beliefs that their workers value higher salaries over increased benefits and that low-wage workers would have difficulty affording regular contributions. These employers also cited worries about their own financial costs and difficulties setting up plans.