The Challenge of Retirement Savings for Small Employers

Los Angeles, October 2, 2013

A new study by the Transamerica Center for Retirement Studies® examines employer-sponsored benefits in the USA, workers’ retirement outlook, and offers recommendations for small company employers and policymakers.

Today, nonprofit Transamerica Center for Retirement Studies® ("TCRS") released a report evaluating the state of the retirement benefits offered by small companies (10 to 499 employees) and the retirement outlook of their employees.

Catherine Collinson, president of TCRS, has been invited to testify to the results of the report before the U.S. House of Representatives Committee on Small Business at today's hearing, "The Challenge of Retirement Savings for Small Employers."

14th Annual Transamerica Retirement Survey

The study, part of the 14th Annual Transamerica Retirement Survey, found that 88 percent of small company workers value 401(k) or similar plans such as SIMPLE IRAs or SEPs as an important benefit, but only 58 percent are offered such a plan by their employers.

"Small businesses are the cornerstone and growth engine of the U.S. economy. They are represented in all industries and generate a wide range of revenue, earnings, and payroll," said Collinson. "Small businesses' offering of retirement benefits can positively affect the retirement outlook of the millions of American workers they employ."

As policymakers, retirement experts, and industry leaders are seeking solutions to help improve the retirement outlook of workers, specifically those at small companies, this study sets out to provide clarity about retirement benefits offered among small companies (10 to 499 employees), including micro companies (10 to 99 employees) and small non-micro companies (100 to 499 employees).

Two Areas of Focus Required

"Much of the public policy discussion around retirement security has focused on encouraging more small employers to offer a plan," said Collinson. "However, it is critical to note that plan sponsorship is not synonymous with plan coverage."

According to the survey, 72 percent of small companies offer a 401(k) plan or a similar employee-funded plan (e.g., SEP, SIMPLE, other), including 71 percent of micro companies (10 to 99 employees) and 89 percent of small non-micro companies (100 to 499 employees), compared to 95 percent of large companies (500 or more employees).

Part-Time Employees Losing Out

Despite the high percentage of small businesses that report offering plans, the findings reveal a pervasive gap in plan coverage: part-time workers. At small companies, only 36 percent of part-time workers are offered a 401(k) or similar plan, compared to 68 percent of full-time workers. This coverage gap also persists among large companies in which 90 percent of full-time workers are offered a plan compared to only 51 percent of part-time workers.


Among the 28 percent of small companies that do not offer a plan, only 22 percent said that they are likely to offer a plan in the next two years. However, nearly one-third (32 percent) indicated that they would be likely to offer a plan in the next two years. However, nearly one-third (32 percent) indicated that they would be likely to consider joining a multiple employer plan offered through a vendor who handles many of the fiduciary and administrative duties at a reasonable cost.

Read the detailed small business retirement report, including detailed results, comparisons of small and large companies, recommendations for policymakers, employers, and workers; a five-year retrospective report; and, a survey tool for plan sponsors. Or visit for further information.

Read the U.S. House of Representatives' Committee Press release 
Watch the Small Business Committee hearing on YouTube