Over the past few weeks, I have looked at and broken down a recent report by the Pew Charitable Trusts called Small Business Views on Retirement Savings Plans. Pew surveyed more than 1,600 small- and medium-sized businesses (either owners or managers) to learn more about their challenges and reasons for providing retirement savings plans for their employees. To get a full picture, they surveyed employers who both did and did not provide plans.
I have written about retirement savings plans run by the government, especially state-sponsored plans. Those plans are focused on smaller, private-sector businesses that are unable to afford to provide an IRA option to their employees. According to AARP, there are seven states that have already implemented plans (California, Connecticut, Illinois, Maryland, New Jersey, Oregon, and Washington) and another 30 are considering it - I’d say that’s a trend.
What do small- and medium-sized businesses think about government-run auto-IRAs? More than 40% of SMBs would support a government-run program, although more support a plan sponsored by an insurance company (82%) or a mutual fund (72%).
For those SMBs that already have a plan, only 13% would drop their existing option and switch to a state auto-IRA (that is, of course, assuming the state would allow that - some are only available for businesses that don’t already have an option).
SMBs without a plan are split between using a state-run plan and starting their own, with 49% favoring a state-run plan and 51% their own. When asked if they would find a state-run online marketplace helpful, 86% said it would be.
Overall, while SMBs want to provide better savings options for their employees, Pew notes, “many small- and medium-sized business owners and managers have concerns about government involvement or are skeptical of government’s ability to effectively implement these proposals.” I invite you to read the entire study.