Businesses cite costs as barrier to retirement plans

New research from the Pew Charitable Trusts shows that small- to medium-sized businesses — those with five to 250 employees — are least likely to offer retirement savings plans.

Just over half — 53 percent — of the small and midsize American employers surveyed offer a retirement plan to workers, Pew said in a report released in June.

Ninety-three percent of employers surveyed said they believe their employees would prefer higher salaries over better retirement benefits, which may be why many companies put a greater priority on pay, paid time off and health plans, the report said.

Pew researchers surveyed more than 1,600 businesses nationwide in 2016, contacting owners, top executives and human-resources managers to identify the obstacles to, and motivations for, offering retirement plans. The report, one of the few centered on retirement plans since the Great Recession, surveyed employers that both do and do not offer such plans.

Why don’t these businesses offer plans? The survey found, to no surprise, that business owners are afraid of high costs. Thirty-seven percent of employers that don’t offer retirement plans pointed to such barriers as the financial cost, and 22 percent said the organizational resources needed to start a plan were a challenge. About 17 percent said they don’t offer retirement plans because their employees aren’t interested.

Why, then, do some businesses offer plans? Employers said they want to help workers save, and also to attract and retain talent. Most who offer plans also match some contributions, which boosts employee participation and helps build savings more quickly.