Small Business Owners not Providing Retirement Benefits

According to a ShareBuilder press release, only 14% of small businesses surveyed offer a 401(k) plan to employees. Just 17% said they felt a strong obligation to offer retirement benefits, and 46% said they felt no obligation at all.

Reasons cited by respondents for planning to never offer retirement benefits included:

• not having enough employees to make it worthwhile (54%),
• the inability to afford a company match (28%),
• unstable business circumstances (26%),
• lack of employee interest (15%), and
• a short-term employee base (15%).

Sixty-three percent of respondents that do not offer a 401(k) plan said they had no idea what a 401(k) plan would cost to administer, the release said. In addition, 61% of those surveyed said they have never heard of the Pension Protection Act. Of those that have heard of the legislation, 76% said it had no impact on their likelihood to offer a 401(k) plan.

Other SBART findings included:

• 47% of small business owners surveyed indicated they are not confident they are prepared for retirement,
• Before they ran their own business, 65% of respondents had retirement benefits offered by their employers,
• Of those not offering a 401(k) plan, 53% said they would never offer one and 30% were unsure,
• 70% of respondents do not offer health care coverage to their employees.

The survey was conducted online within the US by Harris Interactive on behalf of ShareBuilder 401(k) between Oct. 4-23, 2006 among 507 small business owners or small business CEO’s/Presidents (aged 18 and over) who employ 50 employees or fewer, including one-person, owner-operated businesses.