Few Small Businesses Offer Retirement, Health Benefits

Profile

And, according to Dun and Bradstreet’s 20th Annual Small Business Survey, those that did offer retirement plans where likely to:

• be “larger” small businesses, employing more than 5 workers,
• have annual sales volumes of $10, 000 or more,
• be in the business services, manufacturing, or services sectors, and
• classify their companies as “Leaders”

In addition, of those that offered retirement benefits:

• nearly two-thirds offer them to between 91% and 100% of their employees,
• some 13% offer retirement benefits to between 61% and 90% of their workers,
• while 15% offer them to 60% or less of their staff complement

Plan design

When asked what type of retirement benefits they offered,

• just over a third offered IRAs or Keoghs,
• just under a third sponsored 401(k) plans,
• some 17% had qualified pension plans,
• almost one out of ten offered SEPs
• only 6% offered a personal investment portfolio, and
• just 3% provided health insurance to their retirees

Compared to the same survey conducted a year earlier, more companies in 2001 offered 401(k) plans, but fewer offered qualified pension plans and personal investment portfolios.

Keeping Healthy

The survey also revealed that 34% of small businesses provided health care benefits to their employees. Not surprisingly, the companies in this group were likely to:

• be larger “small” employers, with more than six workers,
• have annual sales volumes greater than $10,000
• be store or office based, as opposed to being run from home
• serve business and commercial accounts in the business services, manufacturing or construction sectors, and
• characterize themselves as leaders

In addition, companies that offered healthcare benefits tended to provide them to most of their employees, in fact, two-thirds reported that they granted healthcare benefits to more than 90% of their employees. Only 5% offered benefits to fewer than 20% of their staff complement.

Rising Costs

Almost three quarters of small businesses that provide health care benefits indicated that their premiums had increased since 2000. Only 2% cited a decrease in their premiums, while the remainder reported that their costs had remained constant.

Of those that reported an increase,

• almost 40% cited an increase smaller than 10%,
• while just over a third said it was between 10% and 20%, and
• over a quarter of the sample felt it was more than 20%

Companies whose health care premiums increased dealt with the increase in the following ways:

• just under a third indicated that their companies assumed the extra cost
• a similar number said that they had shopped for a new carrier,
• one in 10 respondents said that they have increased their employees’ premiums,
• some 3% now cover fewer employees,
• while 5% said that they did nothing

In the previous survey, respondents were more likely to indicate that the company assumed the extra cost of healthcare, 61% in 2000, compared with 30% a year later.

In 2000, respondents were more likely to consider shopping for a new carrier or reducing benefits to offset increasing health care premiums in 2001.

Methodology

The survey comprised telephone interviews with 540 owners, senior executives and key decision-makers of small businesses conducted between March and April 2001. For the purposes of the study, small businesses were defined as those with fewer than 26 employees.

– Camilla Klein            editors@plansponsor.com

The complete survey can be viewed at www.dnb.com/smallbusiness/ .