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Data & Research May 6, 2007
Plans Important for Small Biz Success
About half of small business employees (49%) who now belong to a workplace retirement plan say they would stay away from a potential employer not offering such a program, according to a new Fidelity Investments survey.
Reported by Fred Schneyer
A news release from the plan provider reported that 68% of small business employees say a retirement plan is critical or very important for businesses to attract and retain employees, yet, only 36% of employers polled share the perception that such plans are critical or very important to staff retention or attracting new hires.
“Given the highly competitive job market today and the fact that many small business workers told us they are planning to look for a new job in the coming year, small business owners simply can’t afford not to offer a retirement plan,” said Edmund Murphy III, executive vice president, Fidelity Employer Services Company, in the news release.
Cost Concerns
Employers cited the cost of administering a retirement plan as substantially lower than other business operating expenses, ranking it seventh out of the 12 key expense measures studied. The average monthly cost reported for administering a plan was just over 1%. However, the top reasons why small businesses report not having a plan is because they are too expensive (23%) or the company is not profitable enough yet (23%) to offer one, according to the survey.
The study showed that finance and technical services companies had the greatest adoption rates, while retail and construction businesses were at the lower end. Regardless of the industry they represent, nearly all employers agree that retirement plans have allowed them to achieve important business objectives, the survey found. These include helping employees, and business owners themselves, save for retirement, and enabling employers to attract and retain qualified candidates.
Fidelity Investments surveyed a national sample of 992 small business owners and operators with five to 100 employees to determine where retirement plans rank among other costs of doing business. The study calculated operating costs by measuring 12 expense categories in the areas of operations, benefits, insurance, banking and investments, sales and marketing, and retirement plans, where applicable.
For comparative purposes, Fidelity also surveyed a national sample of 338 Americans age 18 or older at businesses with five to 100 employees. Both surveys were conducted online between March 28 and April 6, 2007, by Synovate, an independent research firm.