The SECURE 2.0 Act marked a significant step towards enabling more small business owners to offer retirement savings plans, yet 65% still don’t offer one to their employees. 
To better understand their motivations and challenges, the Capital Group, in partnership with data analytics firm Escalent, surveyed 615 small business owners and employees from May 17 to June 16, 2023.
According to the survey results, enactment of the SECURE 2.0 Act brought a 7% uptick in interest in offering retirement plans to employees, as small business owners increasingly recognize the advantages of offering retirement plans for their employees in today’s competitive environment.
What’s more, nearly 7 in 10 (69%) owners cite helping employees save for the future as a primary driver to offering a plan, with retention and attracting top talent (47% and 40%, respectively) serving as the secondary drivers.
However, despite the 7% uptick in interest in offering a plan post-SECURE 2.0, and with 74% of small business owners indicating they're “likely” to implement one in the next two years, only 13% of them said that was likely to happen in the next six months, suggesting they may be putting it off.
To that end, nearly 40% of owners still believe their company isn't big or stable enough to offer a retirement plan. Additionally, 35% say limited administrative resources are holding them back and 32% more small business owners feel they lack the knowledge to offer a retirement plan or don't know where to start. Surprisingly, these numbers have gone up since 2022.
“Our findings reveal that the passing of the SECURE 2.0 Act in late December 2022 marked a significant stride towards enabling more small business owners and employees to pursue retirement stability, though barriers remain,” explained Renee Grimm, Senior Vice President of Retirement Plans for the Capital Group. “We're seeing forward momentum, but something is holding small business owners back. Many seem to be on the cusp of offering their employees a plan and may simply need the guidance of a financial advisor to utilize and maximize the benefits available to them.”
SECURE 2.0 Familiarity?
Additional findings show that 57% of business owners are familiar with the provisions of SECURE 2.0, versus only 9% of employees. Still, nearly half of employees without a plan (44%) noted that retirement resources to help prepare for the transition to retirement and financial products and services are important for them, which they are not currently receiving today.
And while there’s increased awareness overall among small business owners, many employers still don’t seem to realize the extent to which their employees are feeling the effects of the increased cost of living and inflation over the last two years, the Capital Group notes.
Notably, employees with access to a retirement plan were 10% less likely to feel the impact of inflation over the past 3–6 months compared to employees without a plan. Moreover, owners who offer a retirement plan were more than twice as likely than owners who don’t offer a plan to recognize cost of living and inflation as the primary factors impacting employees’ finances.
Meanwhile, most small business owners (four out of five) who offer a plan believe the SECURE 2.0 Act will benefit their current workplace plan for employees. This was especially true for Gen Z and Millennial small business owners (88%) compared to older business owners (77%).
The survey also revealed that both owners (38%) and employees (45%) were most interested in learning about penalty-free withdrawals for emergency expenses. Perhaps somewhat surprisingly, owners were significantly more interested than employees (36% vs. 18%) in learning about expanded eligibility for long-term, part-time employees.
For access to the full report, click here.
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