A new study from AARP New York shows just over two-thirds of New York’s small businesses want the state to establish a privately managed retirement savings plan for their employees.
68 percent of small businesses surveyed across New York want the state to establish an easy, effective and inexpensive way for their employees to save – with many companies saying they can’t afford to offer retirement savings plans on their own.
That’s the finding of a telephone survey of 451 owners or decision makers of New York companies with nine to 100 employees, released this week by AARP New York. Bill Ferris is AARP's state legislative representative: "About 52 percent of New York's private sector workers, about 3.5 million, have no access to workplace savings retirement plans. According to the United States Government Accounting Office, over half the households age 55 and older have no retirement savings. And the average Social Security benefit in New York state is only $15,580, which unfortunately is the main source of income for many older persons in our state."
Donna Nichols is executive director of the not-for-profit Moreau Community Center in South Glens Falls: "We have about 30 staff, many of them are part-time. The research has shown that if the more employers offer retirement plans, the more likely people are to sign up for them and to be able to save."
Ferris adds Americans are 15 times more likely to save for retirement if they have access to employer-sponsored plans.
As the governor’s Saving More to Achieve Richer Tomorrows (SMART) Commission prepares to issue recommendations on how to address the state’s retirement savings crisis, Ferris points out that AARP and others are urging him to propose the kind of auto-enrollment plan favored by most small businesses. "We are calling upon Governor Cuomo to propose in his 2017 budget, a simple but effective policy that will address this problem by giving people the option to open an IRA through a payroll deduction if their employer offers no way to save."
Five states have already enacted laws creating similar plans.
Laura Kerrone, owner of Psychedelicatessen bagel shop on River Street in Troy, says employee retention is a huge problem for small businesses unable to offer benefit packages. "When I compare myself to a large corporation that has basically more money to play with, I don't have the funds to have all those extra benefits that they do. I can't do paid time off. I don't have medical and dental. I don't have a 401k. There's even some businesses that offer to pay college tuition. Small businesses can't compete with that. We can provide basic pay and maybe an amenity or two, but in the long range of things, if an employee has a family to take care of, they need those other options as well. With a program like this, I can't offer it personally through my business, but I can facilitate it."
The U.S. Department of Labor recently finalized a rule confirming states can facilitate the creation of automatic enrollment retirement savings plans for use by small businesses. The department is publishing a follow-up regulation that will empower major cities to create such plans. Earlier this year, New York City leaders expressed interest in establishing such a plan.
The Cuomo administration responded to a request for comment by email, saying it will “review the survey as work on the proposed 2017-2018 budget continues."