Data & Research October 1, 2008

Economy Fears Affect Small Business Owners’ Retirement Savings

A growing number of small businesses are feeling the stress of the tough economy, leading many to cut back on retirement savings or raid their accounts, according to a survey by ING DIRECT’s ShareBuilder 401k.
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More than half of survey respondents say they are now saving less money both for personal reasons (56%) and for retirement (53%) compared to a year ago, according to a press release of the results. Eleven percent also report reducing or eliminating matches for their employees, and 16% have taken premature withdrawals or borrowed from their retirement accounts.

The report also found that nearly six out of 10 small business owners feel there are not enough incentives in place to help them start a 401(k), the release said. The number of small business owners with some sort of retirement plan dropped from 35% in 2007 to 26% in 2008. Of those operating without a retirement plan, 45% say they are now less likely to start a 401(k) plan compared to a year ago.

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Other survey findings included:

  • 63% of small business employers say are either very or extremely concerned about the future of the economy;
  • 57% see developing new business as their number one challenge through the remainder of the year, and “access to cash” ranked numbertwo at 18%;
  • 40% see the current financial state of their business as worse than a year ago.

Data came from the 2008 Small Business Annual Retirement Trends (SBART) report—an annual survey commissioned by ING DIRECT’s ShareBuilder 401k, conducted online within the U.S. by Harris Interactive from July 29 through August 25. The survey included 512 small business employers (owners, partners CEOs, chairmen, and presidents with 1 to 50 employees).

Deals & People October 1, 2008

Mercer Adds to Outsourcing Biz

Mercer enhanced its current participant education offering by partnering with independent financial services expert Robert Powell.
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Mercer said that as an added-value service from Mercer’s outsourcing business, Powell will meet with clients’ retirement plan participants to offer them a “deeper understanding of a variety of retirement topics.” According to the announcement, the service complements Mercer’s team of on-site Employee Education Consultants, who currently offer information on subjects ranging from basic enrollment and diversification to more advanced planning for near-retirees.

Through in-person presentations and webcasts, Powell will explore a variety of retirement topics with those interested in more specialized information. Mercer said this service may be appropriate for companies with employees who are interested in market perspectives, financial analysis, and industry trends, as well as employees approaching retirement or retirees who need strategies to help plan or manage distributions from their 401(k)s, IRAs, and pensions.

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Powell’s experience includes serving as president of Unison Associates LLC, a Salem, Massachusetts-based financial education, communication, and consulting firm. He is also Editor of MarketWatch’s Retirement Weekly newsletter, Editorial Director for the PBS television documentary Making Your Money Last a Lifetime in Retirement, and a content and consulting services expert for the Financial Planning Association, the Retirement Income Industry Association, and the California Institute of Finance.

“Partnering with someone of Bob’s experience, renown, and practical approach underscores Mercer’s commitment to providing plan sponsors with the resources to not only educate their employees, but provide them with realistic ways to help employees better prepare for retirement,’ explained Eric Levy, Worldwide Partner, Retirement Business Leader for Mercer’s outsourcing business.

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