A bit of disappointing news to start the New Year regarding the ongoing and evergreen challenge to boost retirement plan coverage for employees of small businesses.
New research from LIMRA finds that only four out of 10 small businesses, a sector generally considered to the backbone of American jobs and job growth, offer retirement benefits—either along with insurance benefits or alone.
The research organization’s Small Business and Retirement (2019) report also finds that Americans’ top financial concern is affording a comfortable retirement and access to a workplace savings plan is the most effective way to get people to start to save.
The good news is LIMRA research finds 40 percent of small business employers feel retirement benefits are more important now than three years ago with 57 percent say it is equally as important.
“While only 37 percent of companies with less than 10 employees say retirement benefits are more important now than three years ago, that number increases to 64 percent for companies with 50-99 employees,” it notes. “The larger the small business, the more likely they were to say retirement benefits are more important today than three years ago.”
It adds that separate LIMRA SRI research notes that retirement plan access is the top reason American workers start saving for retirement.
Nearly 4 in 10 of all workers said they began to save for retirement because their employer offered a retirement savings plan.
LIMRA notes that another way small business employees might be able to utilize workplace retirement savings plans is through multiple-employer plans (MEPs)—retirement plans that are sponsored by multiple employers.
“Federal proposals in 2018 are intended to broaden the number of small employers who can participate in MEPs (by making them available to groups on unrelated employers), thereby expanding the number of employees who can access retirement savings plans at their workplace.”