SAN FRANCISCO -- Retirement plans are on the agendas of 167,000 small businesses that don't already have them, according to a new study by Spectrem Group.
The study of U.S. companies with fewer than 100 employees shows that:
* In 40% of small-business retirement plans, the employer provides funding for the plan; in 50% of plans, both employers and employees make contributions; and in 10%, only employees make contributions.
* Mutual funds, insurance companies and full-service brokerages each are cited by about one-quarter of small-business owners as the investment manager for their primary retirement plans. Banks were listed by 11%; and the remaining 14% was split among investment and benefits consultants and other managers.
* 44% of the businesses likely to start plans said they thought employee benefits would be more important to their business in two years than today.
"We conducted the survey on small businesses because we felt there wasn't a good market perspective on them," said Jeffrey Close, director of marketing. "We have done most of our research on large companies for years and we haven't looked at all of the various options of retirement plans."
According to Spectrem's projections based on the response from the survey there are 1,592,000 plans offered by U.S. small businesses that range from Simplified Employer Pensions and Keogh plans, which are widely used by smaller companies, to 401(k) and defined benefit plans, which are most commonly used by the larger firms in the small-business market. The plans have nearly $700 billion in assets and cover 11.5 million workers, according to the research.
The study also reports 70% of small companies do not have any type of retirement plan and do not intend to offer one. "The reason given most often was not enough employees, and the next reason was that they couldn't afford it," Mr. Close said.
The study, conducted in the first quarter through telephone interviews, is titled "Small Business Retirement Services Market" and reports 1.5 million of the 7.6 million U.S. companies with fewer than 100 employees offer some type of retirement plan. Of those, 95,000 have two or more plans.