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Retirement Planning > Retirement Investing

Retirement Plan Value To Small Employers Jumps 7 Percentage Points

By Staff Writer

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NU Online News Service, Oct. 31, 2003, 5:15 p.m. EST – Providing retirement benefits for employees seems even more important to executives at small U.S. businesses this year than it did in 2002, according to results of a survey released by the Transamerica Center for Retirement Studies, Los Angeles.

Researchers at Harris Interactive Inc., Rochester, N.Y., interviewed 300 small business executives and 600 full-time small business employees for Transamerica in late August and early September. The executives and employees all worked at businesses with 10 to 500 employees.

Seventy-four percent of the executives said providing retirement benefits is somewhat or very important for an employer that is trying to attract employees, up from 67% in 2002.

The percentage of executives who said retirement benefits are important for retaining employees has increased to 75%, from 72%.

The small business executives who participated in the survey reported that cutting retirement benefits has been the least popular of four major cost-cutting strategies over the past 12 months.

Thirty-percent of the executives said their companies had reduced the number of employees. Twenty-four percent of the companies had frozen salaries, and 18% had eliminated bonuses. Only 5% of the participating executives said their companies had reduced or eliminated retirement benefits.

The Transamerica survey also confirmed that workers are more interested in letting professionals handle their retirement money. The percentage of workers who prefer defined contribution retirement plans has fallen to 65%, from 73% in 2002, while the percentage who prefer defined benefit plans has increased to 28%, from 21%.

Executives estimated that only 50% of workers now want to manage their retirement assets, down from 63% in 2002.

Transamerica is a unit of AEGON N.V., The Hague, Netherlands.

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