Boston College CRR Says Education Could Lift Retirement Coverage at 97.5% of Firms
Updated
Updated · PLANADVISER · Aug 17
Boston College CRR Says Education Could Lift Retirement Coverage at 97.5% of Firms
1 articles · Updated · PLANADVISER · Aug 17
Summary
97.5% of private-sector firms have fewer than 100 employees, yet only about half of small employers offer a retirement plan, prompting Boston College CRR to argue that better education could narrow a major coverage gap.
More than half of small firms in CRR's 2023 survey thought a plan would cost over $10,000 a year, but the brief said some 401(k) options cost under $2,000 for five employees and under $3,000 for 25.
Up to $5,000 in startup tax credits for three years is still poorly understood, with 77% to 85% of employers with fewer than 50 workers unaware of the incentive and about 80% saying it would make offering a plan more attractive.
Automatic enrollment and lower plan costs undercut assumptions that workers are not interested: Vanguard put defined-contribution participation at 86%, while ICI said average 401(k) costs fell to 0.74% of assets in 2023.
CRR said accountants, advisers, payroll firms, lawyers and bankers could help reframe plans as hiring and retention tools, though expanding coverage will still require more than new products such as state programs and pooled plans.