Small businesses’ decision to offer a retirement plan is based both on economic considerations as well as a sense of accountability, a Bank of America Merrill Lynch survey of 700 small-business owners found. Among those that offer a plan, 37% said they feel responsible for ensuring their employees have sufficient assets to sustain them in retirement. Another 29% said helping employees save for the future and addressing their employees’ financial wellness is important for their company, and 26% view it as a recruiting and retention tool.
Those who offer a retirement savings plan offer other benefits, as well, such as paid time off (86%), bonuses (83%), flex time or alternative work arrangements (67%), financial education or advice (36%).
Among those who do not offer a retirement savings plan, only 18% said they were concerned about their employees having enough money in retirement. The most common reason why they do not offer a retirement savings plan is that employees have not asked for a plan (54%), followed by the belief they do not employ enough employees to warrant a plan (53%), it will not help the firm’s “personal economy” (39%), it is too expensive (37%), they do not want to be obligated to contribute (28%) and it’s simply too confusing (26%).
Rick Irace, head of institutional retirement and benefit solutions for Bank of America Merrill Lynch, told PLANSPONSOR small-business owners would likely see improved profits if more than 30% viewed retirement plans as helping their employees be “financially fit—more focused and productive.” Nearly half (49%) of the small-business owners who do not offer a retirement savings plan said the economy would have to improve before they would offer a plan, and 80% those business owners considering offering a plan within the next two years said cost is the biggest determining factor.
With 3.3 million small-business customers, Bank of America Merrill Lynch has made it a point of offering low-cost retirement plans to offset these concerns, Irace noted. “We are committed to helping small businesses find the right retirement plan, to create loyalty between employee and employer,” he said.