How small businesses can improve retirement for employees
Nearly one-quarter of all full-time workers in the U.S. private sector lack access to a workplace retirement plan, according to the Bureau of Labor and Statistics. What’s more, this percentage increases to more than a third if part-timers are taken into account.
Luckily, there may be a solution to strengthening retirement security, especially for small businesses.
Uncle Sam takes on retirement security
Earlier this year, President Trump signed an executive order to expand workplace retirement plans for American workers. With help from the Labor Department, the order plans to create an easier pathway for multiple employer plans, known as MEPs.
These types of plans allow unaffiliated small businesses to band together to make it easier to offer 401(k) plans for their employees.
The importance of more broad MEPs
Currently, some MEPs do exist for small businesses. However, these MEPs are limited to employers who participate in a similar industry. What the executive order does differently is that it allows employers from all different industries to come together under more broad MEPs.
By allowing small businesses from different industries to work together, it’ll become easier for them to collectively offer retirement plans, as the cost for each employer would drop dramatically. In addition, these types of MEPs may make the process easier to access and understand for small businesses that don’t employ many workers.
Business size matters
In 2017, about 89% of workers at private-sector companies with 500 or more employees were offered a retirement plan, according to The White House. Comparatively, only 53% of workers at private-sector companies with less than 100 workers were offered the same opportunity.
Closing this gap is critical, as small businesses in America are on the rise. In fact, more than 1 million U.S. small retailers are selling products through Amazon today.
As more small businesses begin to emerge, it’s important that the workers who contribute to them have equal access to retirement plans as the Amazons of the world do. Trump’s executive order may have put small businesses one step closer to offering retirement plans for all.