Here are two scary stats for those looking to create a retirement nest egg:
- Only 36% of those who work for businesses with between 10 and 100 employees in 2011 had access to a company-sponsored retirement plan, says the Employee Benefit Research Institute, and
- A whopping 71% of businesses with fewer than 25 employees don’t have a company-sponsored plan, according to the Government Accountability Office.
That data was reported by USA Today.
Costly for businesses
The reason smaller businesses aren’t bigger players in the retirement savings game? They find it too expensive or burdensome to offer a retirement plan to their employees.
Well, the Senate Special Committee on Aging is out to change that. In the coming months, committee members Sen. Mike Enzi (R-WY) and Sen. Herb Kohl (D-WI) plan to introduce legislation that would let small businesses pool resources — and assets — in multiple employer plans.
This would be similar to arrangements that are allowed in the health insurance market in which employers are allowed to band together to negotiate more favorable insurance rates with insurers.
The new multiple employer plans would allow companies to hire third-party financial experts to take on the administrative and fiduciary duties that turn so many small employers away from offering retirement plans.
The advertised result: Lower costs to employers, which would make offering retirement plans far more attractive.
However, it’s expected employers will retain some limited fiduciary liability in the areas of plan selection and fees.
Today, only small businesses that are related to each other in some way can pool their resources to create retirement plans. And even then they have to be sponsored by a group or association.
It’s being reported the proposed legislation has the backing of the U.S. Chamber of Commerce.