Better Retirement Planning For Small Business Employees
Written by Tim Morral
U.S. Chamber of Commerce and AARP join forces to promote retirement planning for the nation's small business workforce.
Retirement planning is a concern for both workers and employers. Without adequate retirement planning and resources, workers run the risk of either working past retirement age or failing to meet their financial requirements during their twilight years.
According to a Reuters report, Employee Benefit Research Institute's 2013 Retirement Confidence Survey showed that only 72 percent of U.S. employers offer 401(k) plans or other retirement plans. This number plummets when it comes to small businesses, with a mere 14 percent of businesses with fewer than 100 employees offering some form of retirement savings plan, based on a U.S. Government Accountability Office study.
At a recent half-day conference co-sponsored by AARP and the U.S. Chamber of Commerce, Robert Reynolds, chief executive officer of Putnam Investments, suggested that businesses be required to provide a retirement savings option to their employees. Under his plan, businesses that do not offer a retirement plan would have to offer a payroll-deduction saving option, with automatic enrollment that would require workers to opt out.
"They're all taking out (payroll) taxes, so why couldn't they also allow for individual savings?" Reynolds told Reuters. "You could give a tax credit to cover the administrative costs of handling the deductions."
Other ideas mentioned at the conference included eliminating the ceiling on employer contributions, expanding the IRA tax credit and expanding opportunities for multi-employer plans, making retirement plans more affordable for small companies.
Although the discussion about strategies to encourage retirement in small businesses will continue, it's important for every small business employer to begin to consider how they can better serve their workers' retirement needs, in ways that make sense for both the employees and the business.
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