December 01, 2011
--- Half of small-business owners are under the misconception that offering an employer-match is required in a defined contribution retirement plan, preventing them from sponsoring a plan. ---
In a recent survey of 501 small-business owners, Nationwide Financial also found that half of these business owners are unaware of the option to sponsor a self-funded retirement plan, where employees pay for the administrative costs.
What they are aware of, however, is the retirement crisis facing this country; 75% of small-business owners agree that such a large number of Americans are financially unprepared for retirement that it has reached crisis levels. Yet only one in five (19%) of these businesses offer their employees a 401(k) or other employee self-funded retirement plan.
Speaking to PLANADVISER, John Carter, president of Nationwide Financial Distributors, believes this is a great opportunity for financial advisers. Even though many small-business owners believe they do not have the resources to offer a plan, this does not mean they don’t want to offer one – many want to. Seventy-eight percent view offering a retirement plan as an effective way to attract qualified employees.
So what is inhibiting them from sponsoring a plan? The primary reason is that small-business owners think their company is too small (69%) and the second most common reason is that the business cannot afford the cost (53%). Twenty-four percent of businesses with six or more employees also cite the burdensome administrative work that goes along with sponsoring a plan.