401(k) help comes from unlikely places.
Nationwide reports that the implementation of Obamacare has decreased the appeal of health benefits for employees and increased 401(k)s’ importance in recruiting and retention.
A recent survey found that 29 percent of small businesses owners who offer 401(k) plans (and plan to increase contributions) say they are doing so because the Affordable care Act has made health benefits less attractive to employees.
Additionally, 43 percent of business owners who plan to increase contributions say they are doing so because their plan is now more important for attracting and retaining employees as a result of the ACA.
For business owners who don’t currently offer retirement benefits but plan to start in the future, 23 percent say it is because a 401(k) plan is now more important for attracting and retaining employees as a result of the ACA.
“The changing health care marketplace has created an opportunity for business owners to increase investment in retirement benefits offered to employees,” John Carter, president of Nationwide’s retirement plans business, said in a statement. “Business owners who help their employees prepare for retirement can differentiate their business as a destination for top talent and a place where valuable workers want to stay.”
The survey found that 86 percent of small business owners say America’s workers are facing a retirement readiness crisis. According to the U.S. Small Business Administration, small businesses (those with 500 or less employees) make up 99.7 percent of all employers, employ nearly 50 percent of all private-sector workers (48.5 percent) and create 63 percent of the net new private-sector jobs in the country.
The good news, according to the company, is that business owners are taking action. The survey found that three in five small business owners who offer retirement plans (58 percent) say they plan to increase contributions, and 19 percent of business owners who don’t currently offer 401(k) plans say they will offer them in the future.
“Retirement plan providers and advisors offer tools, resources and support to help business owners and their human resources staff minimize the time needed to manage a plan,” Joe Frustaglio, leader of Nationwide’s private sector retirement plans business, added. “Examples of how they help include providing employees with personalized retirement readiness reports, offering employee education and communication sessions, and delivering personalized, local support.”
Frustaglio says that when he talks with business owners, they often have misconceptions that prevent them from starting a 401(k) plan for their employees. Those include:
- Plans are too expensive for small businesses – The reality is that small business owners have options and can offer a plan that minimizes fee impact for both the owner and employee.
- It’s hard to find a plan that can meet an individual business’ needs – The reality is that plans of all sizes can be customized to deliver on the needs of the business’ owner and employees.
- Small business retirement plans can’t compete with large corporations’ plans – Lastly, the reality is that small businesses have access to the same retirement plan options as the largest corporations.