According to SurePayroll’s research, 48% of small business owners surveyed indicated that the current state of the economy has had a negative impact on their ability to offer 401(k) benefits. Additionally, of those who do not currently offer employees a 401(k) plan, four out of 10 small business owners attribute it to the perceived cost of starting and administering the program.
According to SurePayroll, the other main factors working against small business 401(k) savings programs are:
- Fewer options: Historically, large companies have had many retirement plans from which to choose. However, vendors offering small business retirement plans tend to offer more limited plans, contributing to the perception that small business plans are generally meant for larger companies, according to the report.
- Salaries are down: According to the SurePayroll Small Business Scorecard for July 2008, employee salaries are down 0.3% this month—and with rising costs for items like gas and groceries, coupled with lower salaries, employees are struggling to save, even if their companies offer a savings plan. According to SurePayroll, some small businesses shy away from providing a 401(k) simply because there is no employee interest.
- Lack of knowledge: The survey indicates that 66% of respondents felt that offering 401(k) benefits would not attract or retain new employees.
- Low returns: According to SurePayroll, 7% of respondents indicated that 401(k) plans are not attractive because they are not yielding worthwhile returns.
Given that small businesses employ an estimated 59 million members of the U.S. workforce, SurePayroll’s analysis concludes that approximately 39 million small business employees do not have access to a 401(k) savings plan and that more than 26 million small business employees do not have access to any form of company-sponsored retirement savings plan.