A new survey finds that among companies that do not offer a 401(k) or similar plan, only 27% say that they are likely to begin sponsoring a plan in the next two years. Why not?
According to “The Current State of 401(k)s: The Employer’s Perspective,” as described in the 16th Annual Transamerica Retirement Survey, among those not planning to do so, their most frequently cited reasons are:
- 58% - Company is not large enough
- 50% - Concerns about cost
- 32% - Employees not interested
- 27% - Company or management is not interested
However, 22% of those not likely to offer a plan indicate that they would consider joining a multiple employer plan (MEP) offered by a vendor who handles many of the fiduciary and administrative duties at a reasonable cost.
An Important Benefit
The vast majority of workers (89%) view a 401(k) or similar plan as an important benefit. A similar percentage (84%) of employers believe that their employees see such a benefit as important. Slightly more workers (60%) than employers (53%) see these benefits as being “very important.”
Workers who are offered a 401(k) or similar plan by their employer are more likely to save and invest for retirement in the plan and/or outside of work (90%) compared with those who do not have access to such plans (48%), a finding which is consistent by company size.
Seventy-four percent of employers believe that offering a 401(k) or similar plan is important for attracting and retaining employees, a finding that increases somewhat with company size — 71% of micro company employers believe they are important, compared with 86% of small non-micro companies and 91% of large companies.
The vast majority of workers (89%) view a 401(k) or similar plan as an important benefit. A similar percentage (84%) of employers believe that their employees see such a benefit as important. Slightly more workers (60%) than employers (53%) see these benefits as being “very important.”
Part-Time Trends
While 74% of employers surveyed offer a 401(k) or similar plan to their employees, only 38% of them extend eligibility to part-time workers. Doing so varies by company size: Large employers (58%) are more likely to extend eligibility to part-time workers than micro companies (34%). Among plan sponsors that do not extend eligibility to part-time employees, 91% do not plan to do so in the future and their most frequently cited reasons include:
- 39% - Generally impractical
- 37% - Concerns about cost
- 33% - High turnover among part-time employees
