EBRI Issue Brief

Small Business Retirement Survey: Policy Knowledge and Reasons for Offering or Not Offering a Retirement Plan

Feb 1, 2024 22  pages


Having access to an employment-based retirement plan is one of the most important factors in having income adequacy in retirement. However, employees working for small businesses (those with 100 or fewer employees) are much less likely to be covered by these retirement plans. This has been a persistent issue. The Employee Benefit Research Institute along with the Center for Retirement Research at Boston College and Greenwald Research conducted a survey of small businesses to give a more current understanding of their attitudes, concerns, and knowledge about retirement plans. This Issue Brief highlights the findings from this survey.

  • Forty-seven percent of the small business owners who were offering a plan and 22 percent of those not offering a plan said they were aware of states launching programs requiring employers without a retirement plan to automatically enroll their employees in an individual retirement account (IRA). Among the small business owners offering a plan, only 21 percent said they would stop offering their plan if this policy was adopted in their state, while 68 percent said they would continue to offer their plan.
  • Among the small business owners not offering a plan, almost three-quarters (72 percent) said they were not aware of tax credits up to $5,000 being available to cover the costs of starting a retirement plan. However, 78 percent said the tax credits would make it at least somewhat more attractive to offer a plan.
  • Over 9 in 10 of the small business owners offering a plan said that a reason that they offer a plan is the positive effect on employee attitude and performance. In addition, 90 percent said that a competitive advantage for the business in employee recruitment and retention is a reason for offering a plan. In fact, 30 percent said the positive effect of offering a plan is the most important reason, while another 25 percent said the competitive advantage is the most important reason.
  • Of the small businesses not offering a plan, the reasons they were most likely to consider for not offering a plan were those regarding the costs of administering a plan and the profitability of the business. The business being too new or too small was the reason most cited as the most important for not offering a plan, at 26 percent. Numerous reasons across many factors were just below this one as being most important, showing that no one reason will clearly be the most effective in increasing offer rates.

Better profitability is a factor that could cause many of those not offering a plan to offer one, but other reasons cited as preventing them from offering a plan may not be as big of impediments as believed given a better understanding of the costs of administering a plan. Many businesses do not have experience working with an outside organization for administering benefits. Thus, companies that work with small businesses can play a role in increasing retirement plan offerings, particularly given the understanding that most small business owners would not be expected to be experts in retirement plans.