CT Small Business Owners Skeptical About State-Run Retirement Plan

New research finds concerns about state-run retirement plans for private sector workers among small business owners – but also ignorance about the program.

Recently LIMRA Secure Retirement Institute conducted four focus groups conducted by Greenwald & Associates comprised of small-business owners in Connecticut to better understand their feelings about the state’s new retirement plan and what they understand about it.

According to the report, while reactions were mixed among the small-business owners regarding the new requirement, there was also some confusion about the state-run retirement plan and how it would affect their businesses. In fact, the report notes that some small-business owners did not realize a state plan actually existed, while others were confused about certain features, especially the required income option. Many simply did not believe their employees would value a state-run plan or utilize it.

Misperceptions Common

Only a small number of participants say they know a significant amount about the Connecticut state plan and how it works. Moreover, the report by Alison Salka, Senior Vice President and Director of Research at the LIMRA Secure Retirement Institute, notes that, even among those familiar with the plan, “misperceptions were as common as accurate understanding of features and parameters.”  A significant minority have not heard about it at all. Reaction to the plan ranges widely – from those who like the idea a great deal to those who do not like it at all.

Those with a positive view of the plan like the idea that the state is addressing the retirement crisis and providing employers a new benefit they were unable to offer before, given the cost and inconvenience. They support the idea of giving employees the opportunity to save, and, according to the researchers, they also are pleased the state is taking responsibility for the plan (removing the burden from them) and that employees can take their accounts with them if they were to leave the company.

For those who were aware of Connecticut’s plan to mandate businesses to offer a retirement savings program, their perceptions were seen as largely based on their personal attitudes towards the role of government and the state of Connecticut as well as their experience as employers and small-business owners. Many simply did not believe their employees would value a state-run plan or utilize it.


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In general, business owners tend to be more positive about various plan features than they are about the plan itself. This, according to the report, suggests the plan has potential after the state outlines more specifics and provides further explanation. In particular, the report says that Connecticut needs to reinforce that the investment management would not be very different from a private plan.

One feature of the plan that may be difficult to sell according to the report is the requirement that half of the account be in a lifetime income option at retirement. “Education on the benefits – the creation a retirement income stream that can’t be outlived – will be important, although it may not be enough to convince all audiences.”

Mixed Messages?

Ironically, the least compelling message from the standpoint of employers was that the plan will reduce future elder poverty and the need for social assistance – which are among the strongest forces driving state-mandated savings initiatives across the country.

About a third of people said they are not confident in their state (34%) or the federal (36%) government when it comes to administering retirement savings, according to recent LIMRA Secure Retirement Institute research. By comparison, only between 12% and 19% are not confident about the administrative ability of banks, mutual fund companies, insurance companies, and investment brokerage firms.

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