Making bigger profits is the single most important reason that might spur small businesses to offer retirement plans, according to a new report from the Employee Benefit Research Institute, the Center for Retirement Research at Boston College and Greenwald Research that was released Feb. 5.
Almost 1 in 4 small businesses (23%) said the biggest reason that would drive them to seriously consider offering a plan was an increase in profits, outweighing state mandates to enroll workers in state-run plans (14%), lower administrative requirements (14%), and business tax credits for starting a plan (11%), the report found.
Almost 3 in 4 small-business owners not offering a plan (72%) reported not being aware of tax credits available to cover the costs of starting one. However, 78% said the tax credits would make it at least somewhat more attractive to offer a plan.
Among small-business owners offering plans, 95% said the reason they offer a plan is the positive effect on employee attitude and performance. Another top reason is the competitive advantage small businesses gain in employee recruitment and retention, with 90% citing this as a reason.
Almost 1 in 3 small-business owners (30%) reported the positive effect on employee attitude and performance as the most important reason for offering a plan, followed by the competitive advantage they gain in employee recruitment and retention (25%) and feeling an obligation to provide a plan for employees (17%).
A survey on which the report is based was conducted between February and April 2023 and canvassed 703 small businesses with 100 or fewer employees. Of the 703 small employers surveyed, 323 offered a retirement and 380 did not.