As a result of the Affordable Care Act, the appeal of healthcare benefits to employees has decreased, while simultaneously increasing the importance of retirement plans as a tool to recruit and retain employees, according to a new Nationwide survey.
The survey by Harris Poll on behalf of Nationwide found that 29% of owners of businesses with fewer than 300 employees that offer 401(k) plans and plan to increase contributions say that they are doing so because the ACA has made health benefits less attractive to employees. Further, 43% of business owners who plan to increase contributions to their company’s 401(k) plan say they are doing so because their plan is now more important for attracting and retaining employees as a result of the ACA.
40“The changing healthcare marketplace has created an opportunity for business owners to increase investment in retirement benefits offered to employees,” says John Carter, president of Nationwide’s retirement plans business. “Business owners who help their employees prepare for retirement can differentiate their business as a destination for top talent and a place where valuable workers want to stay.”
As a result of the ACA, 23% of business owners who don’t currently offer retirement benefits but plan to start in the future, say it now more important for attracting and retaining employees as a result of the ACA.
Preparing for retirement
While employers may be offering more programs, Carter explains that employees need help preparing for retirement now more than ever.
The survey found 86% of small business owners say America’s workers are facing a retirement readiness crisis. These business owners are starting to take action, as 58% of respondents who offer retirement plans say they plan to increase contributions, and 19% of business owners who don’t currently offer 401(k) plans say they will offer them in the future.
“Retirement plan providers and advisors offer tools, resources and support to help business owners and their human resources staff minimize the time needed to manage a plan,” says Joe Frustaglio, leader of Nationwide’s private sector retirement plans business. “Examples of how they help include providing employees with personalized retirement readiness reports, offering employee education and communication sessions, and delivering personalized, local support.”
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According to Frustaglio, business owners have concerns that they say hold them back from offering a 401(k) plan. They include the notion that plans are too expensive for small businesses; it’s challenging to find a plan that can meet an individual business’ needs, and small business retirement plans can’t compete with large corporations’ plans.
But Frustaglio says these are all myths, as small business owners have options and can offer a plan that minimizes fee impact for both the owner and employee.
“Plans of all sizes can be customized to deliver on the needs of the business’ owner and employees,” he adds. “Small businesses have access to the same retirement plan options as the largest corporations.”
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