“Most workers at small to mid-size businesses trust information from their banks and credit unions, but those who do not may be less likely to participate in a retirement savings plan if offered one,” according to a survey by The Pew Charitable Trusts.
The organization surveyed 927 workers that do not have access to a retirement plan and asked them how trustworthy they find information from their “primary financial institution,” their “HR representative,” or “financial institutions in general.”
“The results suggest an association between distrust in financial institutions and the likelihood that workers will choose to stay in a retirement savings plan if enrolled automatically,” write John Scott, director of The Pew Charitable Trusts’ retirement savings project, and Henry Watson, an associate with Pew’s research review and support team. “That includes whether they would take part in a state-sponsored individual retirement account with automatic enrollment, known as an auto IRA, or one sponsored by their employer.”
Still, they add, most of those in the 2016 survey said they find these institutions at least somewhat trustworthy.
“The fact that just 49 percent of all private-sector workers participate in an employer-sponsored retirement plan has led policymakers at the state and city levels to consider launching auto IRA programs,” the authors note. “Research conducted for the Social Security Administration, however, raises concerns that the level of trust in financial institutions could be a factor in determining program participation, especially among Hispanic workers.”
Those who distrust institutions appear to be warier about taking part in retirement savings plans.
“Respondents who said they lacked confidence in the institutions were more likely to say they would ‘probably’ or ‘definitely’ choose not to participate in an employer-sponsored plan if automatically enrolled. About 4 in 10 of those who expressed distrust in their primary financial institution said they would opt out, with 12 percent saying they definitely would do so.”