Retirement Plans Have Many Advantages For Small Firms
There are a variety of incentives employers can offer to improve workers productivity and retention levels in a tight labor market. But as far as small businesses are concerned, offering a retirement plan appears to significantly improve employee retention levels and work performance.
Eighty-five percent of small-business employers who offer a retirement plan said it helped their companys recruitment and retention efforts, according to a recent survey jointly sponsored by Matthew Greenwald & Associates, the Employee Benefits Research Institute and the American Savings Education Council, all of Washington, D.C.
Another 85% said offering a retirement plan helps improve employee attitude and performance.
However, significant portions of small employers do not provide retirement packages for their employees. The U.S. Department of Labor reports that only 46% of small-business employees are offered retirement plans.
“There are a number of reasons [for this],” notes Ruth Helman, senior research associate at Greenwald. “Employees prefer better wages to other benefits, and employers revenues are too small to offer the plans.”
Matthew Greenwald, president of Greewald, says in a statement, “American employers need to re-evaluate what they are offering their employees.
“While many believe sponsoring retirement plans is cost and time intensive, our findings show that there are tremendous advantages for employers, as well as employees.”
Asked why they do not sponsor any savings plans, 48% of small employers responded in the survey that they were uncertain of revenues and did not want to make such a commitment.
“Employers may want to explore retirement savings plans, many of which allow the employer to pass some of the cost on to the employees participating in the plan and dont require employer contribution,” Greenwald notes.
Helman also says there is some miseducation about the issue among small employers who have 100 or fewer workers. “Some employers dont believe that offering retirement plans has an impact on turnover,” Helman notes.
In addition, due to the nature of business they are in some employers do not need to retain their workforce. “Large portions of their workers are seasonally employed, and they dont want to bother to retain them,” Helman explains.
This appears to be one reason why some small-business employers who do not offer plans see few competitive disadvantages.
While the survey was not designed to catch the effects of the recent tight labor market, Helman says she expects “some change because the main reason why employers offer a retirement plan is that it helps employee recruitment and retention.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 4, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.