Nearly 80% of employees view benefits such as a retirement plan as being key considerations when accepting a new position, the ADP Research Institute found. However, only 50% of companies provide a retirement option. While some employers are concerned about cost and disinterest among management and employees alike, the size of the company itself may be another reason it does not offer a retirement savings vehicle, according to ADP.
“Employers with less than 50 employees need to balance the benefits of plan sponsorships with [their] costs, time commitments and fiduciary responsibilities,” ADP says in its report, “Retirement Savings Trends: How Employers Can Extend Coverage and Simplify the Retirement Readiness Process.”
In terms of industry, the percentage of employers that provide retirement benefits varies widely. Manufacturing leads the field with 67.1% of manufacturers offering retirement benefits, which could be due to “the prevalence of unions in this sector, where certain benefit offerings may be contractually mandated,” ADP says. “On the other hand, in the leisure and hospitality sector, only 23.3% of the companies offer retirement benefits, consistent in an industry with a high percentage of temporary, part-time and seasonal workers.”
After manufacturing, the top five industries for providing retirement benefits are information (63.0%); professional and business services (55.9%); financial activities (52.4%); education and health services (51.5%); and transportation and utilities (49.7%).
Similarly, there is a disparity between smaller and larger companies, which “could be attributed to cost, administrative complexity and the fiduciary responsibilities that accompany offering a retirement plan,” ADP says. “Small employers also lack the bargaining power of larger firms because they generally have less assets invested in their plans.”
Employers with 5,000 or more workers were most likely to provide retirement benefits (98.4%), followed by those with 1,000 to 4,999 employees (96.0%). For companies with fewer than 1,000 employees, the percentage offering retirement benefits steadily declines according to their size. Nine in 10 (93.3%) of those with 500 to 999 workers offer these benefits, as do 85.3% with 50 to 499 workers, 60.3% with 20 to 49 workers, and just 33.0% with one to 19 workers.
The data represents 10 million employees at 161,000 companies, all between the ages of 20 and 69 and earning at least $20,000 annually.