401(k) Specialist Issue 2 - 2023 - 9

401(k) NEWS YOU CAN USE
Just 28% of Micro Businesses Offer a
Retirement Plan
said their company was not big or stable enough, 26% who cited
limited administrative resources, 25% with too few employees or
too high of a turnover rate, 21% who said it was too risky, 20% who
believe there is a lack of employee interest, and 19% who aren't
sure where to start.
When asked where they will go for more information about
AS MORE WORKERS lean on their employer for financial wellness
offerings, a new study by Capital Group finds only 28% of businesses
with less than 10 employees offer retirement plans and 51% of
organizations with 10 to 24 employees provide a 401(k).
Perceived ideas of cost were a main factor for not offering a retirement
plans, Capital Group says, as 34% of small businesses cited
plan expenses as their main concern. This was followed by 33% who
setting up a plan, Capital Group research shows small business
owners ranked family, friends, and social media (31%, 31%, and
24% respectively) before seeking guidance from a financial advisor
(15%). As a matter of fact, only 39% of business owners without a
plan reported even having a financial advisor.
Seventy-one percent of business owners who offer a retirement
plan say inflation was their employees' largest financial challenge,
with 79% of employees agreeing. Only 28% of owners who don't
offer a plan understood inflation/cost of living to be the primary
factor impacting their employees' finances, compared to the 81% of
employees who reported this as their biggest challenge.
Almost all (94%) of small business owners who do not currently
offer a plan say they would be open to one if the company were to
receive startup plan tax incentives or credits.
Employees Turn to Plan Sponsors
Amid Inflation Impacts
EVEN AS PLAN SPONSORS expand their retirement offerings, a
survey by financial wellness platform FinFit shows employees are not
happy with the financial wellness benefits their employers provide.
The research reports 53% of employees say their employer has
yet to offer financial wellness benefits or compensation in response
to rising prices caused by inflation. This frustration during
periods of high market volatility has trickled down to their own
savings-44% of employees are unhappy with their current savings
level compared to 33% who indicated the same in 2022, and 68%
of survey respondents said they don't have money set aside for
emergencies or unexpected expenses.
FinFit's research underscores the relevancy behind appropriate,
employer-sponsored financial wellness benefits, and which benefits
employees are prioritizing.
According to the survey, 68% of all employees are interested in
an employer-sponsored savings product, with 47% looking for a
low-cost loan available through their workplace.
Over half (53%) of respondents want a feature that helps them
save more money, 31% are looking for benefits that help them pay
down existing or avoid high-cost debt, and 27% want access to a
financial coach or counselor.
In addition to the above, FinFit finds employees and employers
alike are showing interest in salary-linked loans and early wage access.
" Employers are becoming more open to benefits that directly
address financial issues like high-cost debt, variable cash
flow, and lack of emergency savings, " FinFit added.
ISSUE 2 2023 | 401kSpecialist.com
ONLINE
EXTRA
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401(k) Specialist Issue 2 - 2023

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