The Barriers to Small Market 401(k)s

401k Pew Charitable Trust, retirement, small businesses, state run retirement

Pew offers insight.

The Pew Charitable Trusts quotes its own research in an apparent bid to boost state-run retirement plans.

The polling and policy organization finds that one-quarter of private-sector workers in the United States lack access to a workplace retirement savings plan, “making it difficult for them to build the resources needed to support themselves after their working years.”

It notes that workers at small- to medium-sized businesses—those with five to 250 employees—are least likely to have access to retirement savings options.

“To improve retirement security and to reduce future government spending on social services for the elderly, many states are looking at ways to increase access to private sector employer-sponsored retirement plans,” writes John Scott, director with The Pew Charitable Trusts.

He adds that policymakers are considering legislation “to help employers start their own plans or look to set up state or city-sponsored individual retirement account (IRA) plans that automatically enroll private sector workers who do not have access to workplace plans.”

Citing 2016 research from Pew, he notes that “employers care about their employees’ financial well-being but are concerned about potential costs, administrative capacity, and familiarity with the options when considering whether to offer a plan. In addition, 93 percent believe that their workers would prefer a higher salary over better retirement benefits.”

Among other key findings:

Surprisingly, the Pew research found “few employers use features known to boost participation and savings in plans; just 32 percent use automatic enrollment, while only 14 percent use automatic escalation of contributions.”

Exit mobile version