Not Keen on State-Run Plans

Small and midsize employers surveyed by The Pew Charitable Trusts most often cited expenses (71%), limited administrative resources (63%), and lack of employee interest (50%) as main reasons for not offering retirement plans.

Three-quarters of business owners who do not offer a plan said that, if current circumstances prevail, they will be no more likely to offer one in the next two years than they are now. Key changes that could lead employers to reverse that course include greater profitability, financial incentives and greater employee demand.

When asked what they thought about employee-funded individual retirement account (IRA) plans that use automatic enrollment and predetermined deductions from the person’s pay, employers without plans were either somewhat or strongly supportive of the concept. Many attributed their support to the fact that the automatic-IRA plan would help their employees.

At the same time, that support varied somewhat depending on which entity served as the program sponsor. Support for an auto-IRA initiative proved highest if the plan would be sponsored by an insurance or mutual fund company; it dropped if a state or the federal government ran the program. Still, more than 40% supported a government-run program.

If their state implemented an auto-IRA plan, 13% of businesses that already have plans said they would drop them and enroll their workers in the state program. Meanwhile, half of those without plans said they would start their own rather than enter the state program. For employers that have been contemplating whether to start a plan, the auto-IRA initiative might prompt them to consider plan sponsorship.

Employers expressed strong support for voluntary programs such as online marketplace exchanges or multiple employer plans.