Skip to main content

You are here


Small Plan Stats: Will SECURE 2.0 Move the Needle?

Practice Management

Only 28% of businesses with less than 10 employees offer retirement plans, and only 51% of businesses with 10-24 employees offer them. New research from Capital Group found that many business owners may not be offering a plan due to misperceptions around cost and company size requirements, something SECURE 2.0 is in part intended to address.

While over two-thirds of small business owners (73%) without a plan said they were ‘highly likely’ to offer one in the next two years, only but only 49% have taken steps to do it.

Perceived expense is a key friction area for those not offering a plan, with more than a third of small businesses (34%) citing plan expense as their primary concern.

A 401(k) plan is the most popular retirement plan offered by small business owners (88%), followed by a SIMPLE IRA at only 30%, suggesting there may be low awareness of the latter as a potentially cost-effective option.

“The passing of the SECURE 2.0 Act will remove the last barriers for many [small businesses], enabling employers and the retirement industry to come together to help more Americans save for retirement,” Ralph Haberli, Head of Institutional Retirement at Capital Group, said in a statement. “Additionally, while 12 states have enacted legislation requiring small businesses to offer retirement plans, there appears to still be low awareness of the range of affordable solutions available, including SEP and SIMPLE IRAs.”

Both business owners and employees cited inflation as the biggest factor impacting their finances in the last 3-6 months, closely followed by the rising cost of fuel, the Covid-19 pandemic, and healthcare costs.

Capital Group also found that business owners that offer retirement plans were more aware and sympathetic to their employees’ financial situations:

  • 71% of business owners who offer a retirement plan reported inflation was their employees’ biggest financial challenge, with 79% of employees agreeing.
  • In stark contrast, only 28% of owners who don’t offer a plan understood inflation/cost of living to be the primary factor impacting their employees’ finances, compared to the 81% of employees who reported this as their biggest challenge.
  • Additionally, 73% of small business owners who offer a retirement plan ranked helping their employees save for the future as the primary reason for providing a plan over other reasons, such as retaining current employees (49%) and reducing their company tax liability (23%).