An overwhelming majority of small business owners (SBOs) believe that the country is in the midst of a retirement crisis, according to an online study, commissioned by Nationwide and conducted by Harris Poll.
The survey found that 84% of SBOs believe American workers are facing a retirement readiness crisis. However, 60% of SBOs believe that their own employees are on track to retire. Nearly two-thirds (63%) of SBOs say it’s important for a business owner to provide retirement benefits, but, in reality, only one-third (34%) of them offer these benefits to their employees.
However, of the SBOs who offer retirement benefits, including 401(k) plans, to their employees, 67% say they plan to increase their company contribution to employees. Of the SBOs who do not currently offer retirement benefits, 30% say they plan to offer these benefits in the future.
If that happens, Nationwide notes, then more than half (54%) of SBOs will offer their employees retirement benefits.
A positive economic outlook is a driving force behind this. Half of SBOs who plan to start offering retirement benefits say they will do so because they expect sales or revenue to increase in the next 12 to 24 months (50%), and 32% believe the U.S. economy will improve in the same time frame.
Small business owners who currently offer 401(k) plans and say they will increase contributions have an even more positive outlook: 56% expect company sales or revenue to increase in the next 12 to 24 months, and 53% believe the U.S. economy will improve in that same period.NEXT: ACA driving a focus on retirement benefits
Of SBOs who plan to offer retirement benefits in the future, 25% say the Patient Protection and Affordable Care Act (ACA) has made health benefits less attractive to employees, and 18% say the ACA has decreased company health care costs. Of SBOs who plan to increase company contributions to their employees’ 401(k) plans, 33% say the ACA has made health care benefits less attractive to employees, and 30% say the ACA has decreased the company’s health care costs.
“Lower health care costs means small business owners have the option of contributing more to their employees’ retirement,” says Joe Frustaglio, vice president and leader of private sector retirement plan sales at Nationwide.
As the ACA makes health care benefits less relevant to small business employees, there is mounting evidence that business owners are turning to retirement plans to recruit and retain employees.
According to the survey, among SBOs, 59% disagree that retirement benefits are not important for attracting and retaining employees. More than two in five (42%) SBOs who said they plan to increase contributions agree their company’s 401(k) plan is now more important for attracting and retaining employees as a result of the ACA. Similarly, nearly one-quarter (24%) who will offer retirement benefits in the future say their company’s 401(k) plan is now more important for attracting and retaining employees because of the ACA.The 2015 Small Business Owner Study was conducted between June 8 and June 19, 2015, among 500 U.S. small business owners, defined as companies with less than 300 employees.