"There are millions of small businesses in this country and the idea that 63 percent of those we polled offer no retirement benefits is alarming," said Jeff Seely, chairman and CEO of ShareBuilder Corporation. "Small businesses employ half of all private sector employees in America and serve as our economy's growth engine. Given the rising cost of healthcare, uncertainty about Social Security, and longer life expectancy, it's imperative that America's small business owners understand their crucial role in addressing the looming retirement crisis."
When asked why they expected to never offer retirement benefits, the majority of survey respondents cited not having enough employees to make it worthwhile (54 percent), followed by the inability to afford a company match (28 percent), unstable business circumstances (26 percent), lack of employee interest (15 percent) and a short-term employee base (15 percent). While cost appears to be a hindrance for some, 63 percent of respondents said they had no idea what a 401(k) plan would cost to administer.
Sole proprietor businesses with no employees are the least likely to have a 401(k) plan in place. Just 6 percent utilize a 401(k) product compared with 52 percent of companies that have between 26-50 employees. In fact, the larger the business, the more likely they are to say they will offer a 401(k) plan in the future if they do not currently offer one. Among those not already offering a 401(k), 65 percent of sole-proprietors say they will never utilize a 401(k) while just 17 percent of businesses with between 26-50 employees say they will never enact a 401(k) plan.
"We are concerned that there are misperceptions among America's small business owners about 401(k)s. Too many believe that you have to be a much larger company to afford a sophisticated retirement plan - or even that you have to offer a company match, when that's just not the case," said Stephan Roche, vice president and general manager, ShareBuilder Small Business Group. "There seems to be a critical lack of knowledge here. Even sole proprietors can, and should, consider a 401(k) for retirement savings."
Aside from helping America's small business owners and their employees prepare for retirement, 401(k) plans are also considered a competitive advantage. Of those small businesses that do offer 401(k) plans, 70 percent reported they are important in attracting and retaining employees. According to the survey, 72 percent claimed that over 90 percent of their employees contribute to their retirement plans.
About the ShareBuilder Small Business Annual Retirement Trend (SBART) Survey
The 2006 ShareBuilder Small Business Annual Retirement Trend (SBART) Survey is the company's first annual survey conducted to measure small business owner's attitudes, preferences, and needs for retirement benefits, both for themselves and their employees. The survey also examines current topics in retirement benefits.
This survey was conducted online within the United States by Harris Interactive on behalf of ShareBuilder 401(k) between Oct. 4-23, 2006 among 507 small business owners or small business CEO's/Presidents (aged 18 and over) who employ 50 employees or fewer, including one-person, owner-operated businesses. Companies were weighted by number of employees in order to represent actual proportions in the population.
With a pure probability sample of 507, one could say with a ninety-five percent probability that the overall results would have a sampling error of +/-4.4 percentage points. Sampling error for data based on sub-samples may be higher and may vary. However, that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.
