Employer Barriers To and Motivations For Offering Retirement Benefits


One-quarter of private sector workers in the United States lack access to a workplace retirement savings plan, making it difficult for them to build the resources needed to support themselves after their working years.

Although Social Security and personal earnings or savings contribute to retirement security, most Americans save through employer-provided plans, but even those with such plans face challenges accumulating enough money for their retirements.

Research shows that workers at small- to medium-sized businesses—those with five to 250 employees—are least likely to have access to retirement savings options. To improve retirement security and to reduce future government spending on social services for the elderly, many states are looking at ways to increase access to private sector employer-sponsored retirement plans. Policymakers are considering legislation to help employers start their own plans—for example, through online marketplaces or multiple employer plans—or looking to set up state-or city-sponsored individual retirement account (IRA) plans that automatically enroll private sector workers who do not have access to workplace plans.1

When crafting their approaches, it is useful for states to understand why some employers offer plans and others do not. In 2016, The Pew Charitable Trusts conducted a survey of owners, top executives, and human resource managers at more than 1,600 private sector, small and midsize businesses nationwide. One focus of the survey was to identify the obstacles to, and motivations for, offering plans and to gather data on what plans are currently offered and plan characteristics. For example, do they include matching contributions, automatic enrollment, or automatic escalation of contributions? The survey, one of the few focused on retirement plans since the Great Recession, includes employers that do and do not offer retirement benefits to their workers.

In conjunction with Pew focus group research, the findings show that employers care about their employees’ financial well-being but are concerned about potential costs, administrative capacity, and familiarity with the options when considering whether to offer a plan.2 In addition, 93 percent believe that their workers would prefer a higher salary over better retirement benefits.

Among the survey’s key findings:

Continue Reading At Pew Trusts.org

Author: Michael Marini

Michael J. Marini is President & Financial Adviser at Orlando 401k Specialists.