Even though small-business owners see great value in providing their employees with a 401(k) plan, they struggle with conveying its benefits to the workforce, according to a new Nationwide survey.
More than half of business owners (53%) with 11 to 500 employees reported having difficulty communicating the benefits of their retirement plans and encouraging employees to participate, the survey found. Among female entrepreneurs and younger business owners between the ages of 18 and 34, the issue was even more pronounced with 60% of women and 65% of younger business owners reporting problems.
By and large, business owners viewed 401(k) plans as beneficial to both their individual businesses and their workforces. Most cited the importance of the plans in attracting top talent (88%) and improving employee retention (86%) and agreed that workers see 401(k) plans as a necessary benefit (84%). An overwhelming majority (88%) cited the tax advantages of the plans, which benefit small businesses and workers alike.
Business owners nevertheless reported challenges in offering a plan, with 45% citing financial cost and 37% noting administrative issues. Forty-one percent said encouraging and managing employee participation was also a challenge.
Still, most business owners (92%) agreed that the benefits outweighed the challenges of running a plan, according to the survey.
Nearly two-thirds (64%) felt it was their responsibility to provide employees with details on the benefits of participating in the plan, and 62% felt it was their role to share information about how to enroll in the plan.
"A workplace retirement plan, such as a 401(k), is among the most valuable employment benefits and a top gauge of retirement readiness. As such, it's integral that employers feel equipped to effectively have these conversations with their employees," said Eric Stevenson, president of Nationwide's retirement plans business, in a news release.
The survey was conducted Aug. 22-28 among a sample of 400 U.S. business owners offering a 401(k) plan to their employees. Business owners were defined as having between 11 and 500 employees, being 18 years or older, and self-reporting as either a sole or partial owner of their business.
