Why Do Some Small Businesses Offer Retirement Plans?


The brief’s key findings are:

  • Many workers lack access to an employer retirement plan, and this coverage gap is driven by small firms.
  • But, in fact, about half of small firms do offer a plan, so it’s important to understand the types of these firms with and without a plan.
  • Available data suggest that the small firms with a plan are larger and have workers with higher earnings and education.
  • Small firms without a plan cite three obstacles: not big enough or firmly established, workers prefer cash wages, and cost.
  • The first two obstacles may be insurmountable. But cost concerns might be eased by providing more information on low-cost options.

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