For years, businesses have offered healthcare benefits to recruit and retain talent. But the implementation of the Affordable Care Act (ACA) has lessened the appeal of such benefits. As a result, small businesses are now focusing on retirement benefits, a new study has found.
Small Business Retirement Plans on the Rise
According to a survey by insurance company Nationwide, three out of five small business owners who offer retirement benefits (58 percent) say they plan to increase contributions.
Moreover, 19 percent of business owners who currently don’t offer any retirement benefits plan are planning to offer them in the future.
Key Findings of the Nationwide Survey
Here are some more surprising highlights of the survey:
- Nearly 60 percent of small businesses plan to increase their company contribution to employee’s 401(k) plan — and of that group, 43 percent say their plan is now more important for attracting and retaining employees as a result of the ACA.
- Among small business owners who intend to offer a plan in the future, about one in four (23 percent) say that a 401(k) plan is now more important for attracting and retaining employees as a result of the ACA.
- Of small business owners who plan to increase their contributions, 56 percent expect company sales or revenue to increase in the next 12 to 24 months, and 41 percent believe that the U.S. economy will improve in the next 12 to 24 months.
“The changing health care marketplace has created an opportunity for business owners to increase investment in retirement benefits offered to employees,” said 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.”
Retirement Plans Gaining Rapid Momentum
In the recent past, retirement plans for small business employees has gained considerable momentum because of various factors, other than the ACA.
Policymakers like Washington Governor Jay Inslee, for example, are signing bills to help small business employees save for retirement.
Other states are also moving toward creating state-managed retirement plans in different forms. For instance, California is conducting a market analysis that’s required before the state retirement plan can be implemented.
Explore Your Retirement Plan Options
For a small business owner interesting in offering retirement benefits, there are several options worth exploring. The most popular and easiest option is a 401(k). You can set up a plan in less than a week with as little as $40 a month after factoring in the tax benefits.
You may also go for a payroll deduction individual retirement account (IRA). This plan is even easier requiring only that employers ensure that the money transfers.
Alternatively, you can choose the Savings Incentive Match Plan for Employees (SIMPLE) IRA.
There are other options that small businesses can explore before choosing the right plan their retirement package. If selected wisely, a retirement plan can help you attract and retain the right employees.
About the Study
Harris Poll, on behalf of Nationwide, surveyed 502 small business owners from companies with less than 300 employees.
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