The temporary’s key findings are:

  • Our 2023 Small Enterprise Retirement Survey appears at why some small companies supply a retirement financial savings plan and others don’t.
  • Components that have an effect on whether or not small companies supply a plan embrace agency dimension, wages, and business, in addition to beliefs on whether or not it should assist appeal to staff.
  • The primary boundaries to providing a plan are considerations in regards to the stability/dimension of the agency and the perceived prices of a plan.
  • Considerations about prices are pushed by misperceptions; many companies are unaware of lower-cost choices for employers and tax credit.
  • The outcomes additionally counsel that state auto-IRA applications usually tend to encourage than discourage companies from providing their very own plan.


At any given time, solely about half of U.S. non-public sector staff are lined by an employer-sponsored retirement plan, and few staff save with out one.  The protection hole, which undermines the retirement safety of the nation’s staff, is pushed by a scarcity of protection amongst small employers.  Curiously, nonetheless, about half of companies with lower than 100 workers do supply a plan for his or her workers.  This temporary, which is predicated on a latest examine, presents the outcomes of a brand new survey of small employers to know why some supply retirement plans and others don’t.

The dialogue proceeds as follows.  The primary part describes the brand new survey and identifies elements that make a agency seemingly to supply protection.  The second part studies the boundaries that companies understand to providing a plan and assesses the accuracy of those perceptions.  The third part examines whether or not the presence of state-sponsored retirement applications – which typically require companies with no plan to enroll their staff within the state program – shifts agency perceptions. 

The ultimate part concludes that essential drivers to providing a plan, at present or within the close to future, are a agency’s beliefs, similar to whether or not they assume retirement plans matter for worker hiring and retention.  Importantly, many employers with no plan maintain misperceptions in regards to the monetary and time prices of providing one.  Subsequently, higher consciousness of the various accessible choices for small companies might assist shut the protection hole.  Lastly, state-sponsored retirement applications usually tend to encourage than discourage the adoption of employer plans.

The 2023 Small Enterprise Retirement Survey

The 2023 Small Enterprise Retirement Survey, which was produced in collaboration with the Worker Profit Retirement Institute (EBRI) and Greenwald Analysis, was carried out between February and April 2023 and consists of 703 companies with 100 or fewer workers.  This survey replicates the final main survey targeted on small enterprise retirement plans, which was carried out in 1998 by EBRI and Greenwald Analysis.  What is exclusive in regards to the 2023 survey is that it features a pattern of 100 companies with 0-4 workers – a bunch normally excluded from surveys of small employers.  Amongst all companies sampled, 46 % supplied a retirement plan, whereas the opposite 54 % didn’t.  Since 92 % of all small companies have fewer than 20 workers, this sample is pretty in step with nationwide knowledge (see Determine 1).

The survey responses can relate varied elements to the chance of a agency providing a plan (see Determine 2).  As anticipated from earlier research, companies with 50-100 workers, these with increased common salaries, and companies in skilled, technical, and scientific providers industries are more likely to supply a retirement plan.  In the meantime, companies in retail gross sales, wholesale gross sales, and lodging (hospitality and meals providers) are a lot much less more likely to supply a plan.  However different elements additionally mattered.  Beliefs about whether or not having a retirement plan is essential for hiring and retaining good workers are additionally a robust driver.  Notably, a agency’s beliefs about income progress had little to no impact on having a retirement plan.  Curiously, for companies with no plan, beliefs are additionally an essential predictor of their chance of adopting a plan within the close to future.

Bar graph showing the Effect of Selected Firm Characteristics on Likelihood of Offering a Plan, 2023

What Retains Corporations from Providing a Plan? 

Traditionally, small companies that don’t supply a plan have cited three primary causes: 1) unsure revenues; 2) prices; and three) worker preferences for wages.  The third motive, worker preferences for wages, has dropped down the record, however prices stay essential, whereas considerations about income stability/dimension have grown to grow to be the most important barrier (see Determine 3).

Bar graph showing the Major Reasons for Not Planning to Offer a Retirement Plan, 1998 and 2023

As one would anticipate, concern about revenues declines as agency dimension will increase (see Determine 4).  Certainly, near 80 % of companies with 0-4 workers cited income and dimension as a significant barrier to providing a plan.  The smallest of those small companies might merely have an excessive amount of on their plate so as to add a further profit.  For established companies, prices and administrative burdens grow to be crucial issue for not providing a plan. 

Bar graph showing the Percentage of Firms that Cited Revenue/Size as a Major Reason for Not Offering a Retirement Plan, by Firm Size, 2023

Curiously, most companies surveyed that cite prices and administrative burden/compliance as boundaries don’t have a very good sense of how a lot cash or time is definitely required to arrange a plan.  A fast Google search yielded a number of 401(ok) choices the place annual employer prices would solely be about $2,500 for a agency with 10 workers and $5,000 for a agency with 50 workers.  However, over half of small companies imagine offering a retirement plan would price greater than $10,000 per yr; and practically 30 % assume it could price greater than $20,000 per yr (see Determine 5).

Bar graph showing the Perceived Annual Costs of Offering a Retirement Plan, 2023

Not solely do small companies overestimate the price of providing a plan, however the overwhelming majority – significantly these with fewer than 50 staff – will not be conscious that they will declare a tax credit score of as much as $5,000 for 3 years to assist offset the prices of beginning a plan (see Desk 1).  Curiously, about 80 % of employers say that such a credit score would make providing a plan extra enticing.

Table showing the awareness of retirement plan tax credit and impact on attractiveness of offering a plan, by firm size, 2023

Moreover, small companies don’t have a very good sense of how a lot time it could take to manage a retirement plan (see Determine 6).  Most companies imagine it could take a number of days to a complete week each month.  However in actuality, after the preliminary set-up, working a retirement plan ought to solely take a number of hours a yr.

Bar graph showing the Perceived Monthly Time Required to Administer a Retirement Plan, 2023

Many small companies are additionally unfamiliar with the assorted retirement plan choices which might be designed to assist ease the price and administrative burden of providing a plan.  Whereas most small companies are a minimum of considerably aware of 401(ok)s, the overwhelming majority will not be aware of SIMPLE, SEP, and MEP/PEP plans (see Determine 7).  And this proportion has barely budged within the final 25 years.

Bar graph showing the Familiarity with Different Retirement Plans, 1998 and 2023

These outcomes counsel that many companies overestimate the monetary and time prices required to supply a plan, so higher consciousness of precise prices in addition to accessible choices may assist cut back the boundaries that small companies understand. 

Will State-sponsored Packages Affect Agency Conduct?

At the moment, 14 states have launched or are getting ready to launch applications requiring employers with no plan to robotically enroll their workers in an Particular person Retirement Account (“auto-IRAs”).  The survey requested all employers within the pattern – not simply these in states with auto-IRAs – whether or not the presence of such a program would make them much less or extra more likely to have their very own plan.

The outcomes present that, total, the presence of state-sponsored applications doesn’t make companies much less more likely to supply their very own retirement plan (see Determine 8).  Amongst companies that already supply a plan, about 70 % say they’d proceed to supply their very own if their state launched a mandate.  Amongst companies that didn’t supply a plan, nearly 60 % mentioned a mandate would truly make providing their personal retirement plan extra enticing.

Pie chart showing Firm Response to Mandates in State-sponsored Retirement Programs, Offers a plan: Would you stop offering your current plan?
Pie chart showing Firm Response to Mandates in State-sponsored Retirement Programs, Does not offer a plan: Would offering your own plan be more attractive?


The protection hole is a urgent concern for the nation’s retirement revenue safety, and the hole is pushed by small employers.  In an effort to encourage progress in protection, you will need to perceive the traits of small companies that do and don’t supply a plan.

For companies that provide or are contemplating providing a retirement plan within the close to future, their beliefs are essential – similar to whether or not they assume retirement plans matter for worker hiring and retention. 

For companies that don’t supply a plan, two main longstanding boundaries – income stability/dimension and prices or administrative burden of getting a plan – stay prime considerations amongst small companies as we speak. 

Income considerations are extremely related to agency dimension, significantly companies with fewer than 10 workers.  It’s comprehensible that companies might must grow to be established earlier than establishing a office retirement plan is seen as a viable possibility.  

Views on price or administrative burdens, nonetheless, appear to be pushed by misperceptions in regards to the monetary prices and the time it could take to function a plan.  These outcomes counsel that higher consciousness of the particular prices in addition to plan choices designed for small companies may assist cut back the boundaries that small companies understand.

Lastly, the expansion of state-sponsored retirement applications may very well encourage companies with no plan to undertake one. 


Bloomfield, Adam, Kyung Min Lee, Jay Philbrick, and Sita Slavov. 2023. “How Do Firms Respond to State Retirement Plan Mandates.” Working Paper 31398. Cambridge, MA: Nationwide Bureau of Financial Analysis.

Heart for Retirement Analysis at Boston Faculty, Worker Profit Analysis Institute, and Greenwald Analysis. 2023. 2023 Small Employer Retirement Survey.

Chen, Anqi. 2023. “Small Business Retirement Plans: The Importance of Employer Perceptions of Benefits and Costs.” Particular Report. Chestnut Hill, MA: Heart for Retirement Analysis at Boston Faculty.

Drobleyn, Eric. 2023. “How Much Time Does Annual 401(k) Administration Take?” Cell, AL: Worker Fiduciary.

Guzoto, Theron, Mark Hines, and Allison Shelton. 2022. “State Auto-IRAs Continue to Complement Private Market for Retirement Plans.” Washington, DC: Pew Charitable Trusts.

U.S. Bureau of Labor Statistics. Business Employment Dynamics, 2022. Washington, DC.

U.S. Bureau of Labor Statistics. National Compensation Survey, 2021. Washington, DC.

Yakoboski, Paul and Pamela Ostuw. 1998. “Small Employers and the Challenge of Sponsoring a Retirement Plan: Results of the 1998 Small Employer Retirement Survey.” Challenge Transient Quantity 202. Washington, DC: Worker Profit Analysis Institute.


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