Dive Brief:
- Retirement savings benefits are typically offered by medium to large employers, but thanks to the federal government and some state laws, very small businesses (10 employees and under) are starting to look at providing those types of savings options to their workers, according to an article at Philly.com.
- Philly.com profiles a small Philadelphia-area employer, R.P. Keller Landscaping Inc., that is offering employees a 401-K retirement plan as a way to reduce turnover. The firm has six to eight people full time.
- According to a U.S. Federal Reserve report released in May, 40% of workers surveyed at small firms don't think much about retirement planning. Nationally, 22% of firms with 10 employees or less provide retirement plans, according to a Pew Charitable Trusts report released in early 2016. By contrast, 75% of employers with workforces of 500 or larger offer retirement plan benefits.
Dive Insight
Dan Hernandez, a certified financial planner in Wyncote, PA, told Philly.com that interest in 401k plans by small business clients is on the rise because those employers tend to have a "protective attitude" toward workers. Hernandez added that some small clients may substitute a 401k plans for health insurance because the latter is just too expensive.
One enrollment-boosting program in New Jersey cited by Philly.com is the New Jersey Small Business Retirement Marketplace, which uses the same basic approach as health insurance exchanges created by the federal Affordable Care Act.
Philly.com also mentions a federal program in the 2017 budget proposal that offers increased tax credits, up to $1,500 per employer per year for three years, for small employers that add retirement plans.
Being small means having to try even harder to attract and retain talent, no matter the industry sector, and these types of benefits may help move the needle for small employers.
