A recent report has found out that most small business owners are shying away from offering retirement benefits to their employees. The report also highlighted that the small business owners might not be hiring much this year and the business sentiment is not too optimistic.
Dropped Retirement Benefits
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The Capital One’s Spark Business Barometer shared that the percentage of small businesses that offer retirement plans has dropped by about 50 percent. The report also pointed out that only 13 percent of small business owners offer a 401 (k) plan to the staff members. In the final quarter of 2014, about one in four small businesses offered a retirement plan to the employees. About 30% of the businesses that have employed 20 to 49 people are offering a 401 (k) plan and just 7% of businesses having less than 5 employees are offering this plan.
The Reason
When asked about the reasons for the decline, the small business owners told the researchers that they were not offering a retirement benefits plan because they could not afford the high costs associated with them. Some business owners also confessed that they were too small to offer such plans to employees. This data was shared by the President of ShareBuilder 401k, Stuart Robertson.
New Hires
The recruitment plans of the small businesses are not so great, revealed the report. Just 26 percent of small business owners stated that they would hire new staff in the next 6 months time. Out of these 26 percent, nearly half admitted that they cannot afford to hire full-time employees. The reasons behind the low hiring are the poor retail conditions and political uncertainty.
Overcoming the Misconceptions
ShareBuilder 401k now plans to use the report to enlighten small business owners that 401 (k) plans can be very affordable, straightforward and accessible. Any owner of any business no matter how small the business is can establish a plan without even needing to make matching contributions, said Robertson.
Poor Business Conditions
The report also found that the business optimism was also low. Only 34% of business owners confessed that the business conditions were good in this year until now. About one in five companies that were part of the survey have admitted that the business had been poor this year. It can be assumed that when the business sentiment gets better, small business owners might be more inclined to offer retirement benefits.
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