Workers Say Small Businesses "Obligated" to Offer 401(k)s

November 9, 2007 ( - The second annual Small Business Annual Retirement Trends survey (SBART) commissioned by ShareBuilder Advisors, LLC, found 64% of employees of small businesses said the 401(k) is an important benefit that employers should be obligated to offer.

According to a press release, only half of small business employers indicated they feel a strong or some sense of responsibility to offer a retirement plan. The survey report points out a number of areas where employees and employers had differing outlooks and approaches on retirement-related topics.

For one, small business employers are more confident overall in their retirement savings (53% very/somewhat confident) than employees (41%).

Employees surveyed are most likely to use 401(k) accounts to fund their retirement at least in part, but employers surveyed are most likely to rely on personal investments in IRAs, stocks and mutual funds, the release said. In addition, less than 40% of employers said retirement plans are crucial in attracting and retaining employees versus nearly 60% of employees.

Less than 20% of employers said they believe a 401(k) plan would prevent their employees from leaving, however, nearly 40% of employees indicated they would leave their current job for one that provided a 401(k).

Nearly half of employees surveyed said they believe Social Security will not be around when they retire, where two-thirds of employers said they believe it will.

One thing both employers and employees agreed on is a lack of overall satisfaction with their retirement benefits. Only one out of four employers and employees reported being extremely/very satisfied with the retirement benefits offered by their company.

Additionally, both groups showed the most interest in the Roth 401(k) over other features such as Lifecycle funds, ETFs, and auto enrollment.

Other survey findings, according to the press release, included:

  • Only 35% of all small businesses offer retirement benefits to their employees (about the same percentage as reported one year ago); 13% of these benefits are in the form of a 401(k), compared to 14% in 2006.
  • Owner-only firms are least likely to have a 401(k) program (8%).
  • Nearly one quarter of small businesses that do offer a 401(k) are not actively encouraging their employees to participate.
  • 47% of small business owners who do not currently offer a 401(k) said they never intend to offer one.
  • The top reason employers gave for not planning to ever offer a 401(k) was "not enough employees to make it worthwhile," followed by "can't afford to offer company match," and "employees not interested."
  • The leading reason employers gave for considering a 401(k) was the incentives provided via tax breaks (26%).
  • 52% of employers without a 401(k) do not know what to expect to pay in annual administration fees.
  • Female owners are much less likely to offer retirement benefits at their business versus their male peers (73% vs. 61%)
  • Women owners in general are less confident in retirement preparedness than male owners (39% vs. 58%) and are less likely to have personal investments like an IRA (44% vs. 55%), stocks (32% vs. 53%), and mutual funds (32% vs. 49%).
  • Half of all employers at micro businesses (1 - 25 employees) feel no responsibility to offer retirement plans while three-quarters of employers of small businesses (26 - 50 employees) feel they have either a strong or, at least, some level of responsibility.
  • Female employees feel more strongly than male employees that employers are obligated to provide retirement benefits (70% vs. 60%).

The survey was conducted online within the United States by Harris Interactive from July 26 through August 28, 2007 among 519 small business employers (including owners, partners CEOs, chairmen and presidents with 1-50 employees) and 1,147 full-time small business employees aged 18 and over.

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