They don’t call it The Empire State for nothing.
A new survey from AARP finds 68 percent of small business owners in New York say they can’t afford to offer 401ks and similar retirement plans, and therefore want the state to do it for them.
In an oddly-timed coincidence, 20 special interest groups signed a letter urging Governor Cuomo to include auto enrollment in a state-sponsored plan in his upcoming budget proposal. The groups claim it could help up to 4.7 million workers who lack access to “a pension or 401(k) on the job.”
The survey showed:
- 68 percent support (40 percent “strongly”) legislation to establish a basic, privately-managed, ready-to-go retirement savings plan for their employees that would be administered by the state;
- 80 percent think state lawmakers should back a plan to make it easier for small business owners to offer a way to save for retirement to their employees – with 56 percent strongly agreeing;
- 68 percent of those who do not offer a retirement savings plan for their employees cited excessive cost as an obstacle – more than how complicated or time consuming it would be.
Respondents were evenly divided among Republicans and Democrats at 24 percent each, with 18 percent identifying themselves as independent.
AARP cites the U.S. Census Bureau’s Current Population Survey, (March Supplements 2012 – 2014) in noting that more than half of all private sector employees in New York – including over 60 percent of millennials and 67 percent of Hispanics – lack access to retirement plans or 401(k)s at work.
Yet Americans are 15 times more likely to save for retirement if they have access to employer-sponsored plans, according to the advocacy organization.
“An automatic payroll-deduction option is key to empowering New Yorkers to save for a secure financial future and retirement – and lessen their dependence on public assistance,” it concludes. “As the Governor’s Saving More to Achieve Richer Tomorrows (SMART) Commission prepares to issue recommendations on how to address the state’s retirement savings crisis, AARP and others are urging him to propose the kind of auto-enrollment plan favored by most small businesses.”
Five states have already enacted laws creating similar plans: California, Connecticut, Illinois, Oregon, and Maryland. Legislation has been introduced in about 20 additional states.
The U.S. Department of Labor recently finalized a rule confirming states can facilitate the creation of automatic enrollment retirement savings plans for use by small businesses. And the department is publishing a follow-up regulation allowing major cities to create such plans. New York City leaders earlier this year expressed interest in establishing a plan at the city level.
The article has been updated to reflect an additional source.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
The fact that over half of private sector employees in New York State do not have access to a workplace savings plan is taken from the U.S. Census Bureau’s Current Population Survey, March Supplements 2012 – 2014.