newsAccording to a report by USA Today, only 36 percent of small business employers had access to retirement plans, sponsored by their employer, in 2011. And, according to the Government Accountability Office, over 70 percent of very small businesses (those with fewer than 25 employees) lack access to a company-sponsored retirement plan. The primary cause of this lack of participation is the simple fact that small businesses find it too expensive or otherwise costly to offer retirement plans.

The Senate Special Committee on Aging, specifically Sens. Mike Enzi (R-WY) and Herb Kohl (D-WI), is in the process of developing a bill that would allow small businesses pool assets into multiple employer plans. The system would be comparable to the one in place for employers in the health insurance market. In that market, employers are allowed to pool resources to negotiate better health insurance rates. The new plan aimed at increasing retirement plan participation would allow companies to bring on third-party financial professionals to remove the burden of administrative duties which, in addition to the financial burden, work to turn small businesses away from retirement plans.

The end result is expected to be decreased plan costs to employers and decreased administrative and fiduciary responsibilities making retirement plans more appealing; though some limited liability would remain with employers in regards to plan fees and selection. Currently, only related businesses have access to a limited form of resource pooling and must be sponsored by an outside group. The new bill seeks to remove these barriers and open up the retirement plan market to smaller employers and their employees.



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