Affordable Care Act Creating Momentum for Retirement Plans’ Importance
COLUMBUS, Ohio, Sept. 16, 2016 /PRNewswire/ — Small business owners are finding that the implementation of the Affordable Care Act (ACA) has decreased the appeal of health care benefits to employees and increased retirement plans’ importance as a tool to recruit and retain employees.
A recent survey conducted online by Harris Poll on behalf of Nationwide found that 29 percent of owners of businesses with less than 300 employees who offer 401(k) plans and plan to increase contributions say that they are doing so because the ACA has made health benefits less attractive to employees.
Additionally, 43 percent of business owners who plan to increase contributions to their company’s 401(k) plan say they are doing so because their plan is now more important for attracting and retaining employees as a result of the ACA. For business owners who don’t currently offer retirement benefits but plan to start in the future, 23 percent say it is because a 401(k) plan is now more important for attracting and retaining employees as a result of the ACA.
An opportunity for business owners to invest in its benefits
“The changing health care marketplace has created an opportunity for business owners to increase investment in retirement benefits offered to employees,” says John Carter, president of Nationwide’s retirement plans business. “Business owners who help their employees prepare for retirement can differentiate their business as a destination for top talent and a place where valuable workers want to stay.”
Carter says that American workers need help preparing for retirement now more than ever. The survey found that 86 percent of small business owners say America’s workers are facing a retirement readiness crisis. That’s significant because, according to the U.S. Small Business Administration, small businesses (those with 500 or less employees) make up 99.7 percent of all employers, employ nearly 50 percent of all private-sector workers (48.5 percent) and create 63 percent of the net new private-sector jobs in the country.
The good news is that business owners are taking action. The survey found that 3 in 5 small business owners who offer retirement plans (58 percent) say they plan to increase contributions, and 19 percent of business owners who don’t currently offer 401(k) plans say they will offer them in the future.
“Retirement plan providers and advisors offer tools, resources and support to help business owners and their human resources staff minimize the time needed to manage a plan,” says Joe Frustaglio, leader of Nationwide’s private sector retirement plans business. “Examples of how they help include providing employees with personalized retirement readiness reports, offering employee education and communication sessions, and delivering personalized, local support.”
Owners have 401(k) misconceptions
Frustaglio says that when he talks with business owners, they often have misconceptions that prevent them from starting a 401(k) plan for their employees. Those include but are not limited to:
• Plans are too expensive for small businesses.
– Reality: Small business owners have options and can offer a plan that minimizes fee impact for both the owner and employee.
• It’s hard to find a plan that can meet an individual business’ needs.
– Reality: Plans of all sizes can be customized to deliver on the needs of the business’ owner and employees.
• Small business retirement plans can’t compete with large corporations’ plans.
– Reality: Small businesses have access to the same retirement plan options as the largest corporations.
Business owners should contact their financial advisor if they have questions about their current retirement benefits plan or are interested in starting a plan. Nationwide also provides resources for business owners to learn about the options available to them here.
The Small Business Owner Study was conducted online by Harris Poll on behalf of Nationwide from June 10-23, 2016. Respondents comprised 502 U.S. small business owners of companies with less than 300 employees – “business owners”, including 185 small business owners who currently offer 401(k)’s and plan to increase contributions and 102 small business owners who don’t currently offer 401(k)’s but plan to in the future. Results are weighted to be representative of small-business owners in the U.S. Research participants were drawn from the Harris Poll Online (HPOL) research panel and partner sample. Because the sample is based on those who were invited to participate in the HPOL panel, estimates of theoretical sampling error cannot be calculated. Percentages were rounded to the nearest whole percent. Differences in the sums of combined categories/answers are due to rounding.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit here.
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