Recently LIMRA Secure Retirement Institute conducted a four focus groups made up of small-business owners in Connecticut to better understand their feelings about the state’s new retirement plan and what they understand about it. The results of these focus groups also provide insight into how small-business owners across the nation may react to the mandates of possible upcoming retirement legislation.
While reactions were mixed among the small-business owners regarding the new requirement, there was also some confusion about the state-run retirement plan and how it would affect their businesses. In fact, some small-business owners did not realize a state plan actually existed. Others were confused about certain features, especially the required income option. Many simply did not believe their employees would value a state-run plan or utilize it.
Misinterpretations aside, mistrust of government entities administering a state-run plan fuels some negative responses. In a prior study, one third of Americans said they are not confident their state or the federal government can effectively administer retirement savings plans.
Some of the negative perceptions of the state-run plan comes from unsatisfactory experiences with health exchanges. In other cases, participants conflate the state managing the new state-run retirement plan with the already established state teachers’ and employees’ pension programs. Both have faced well-publicized funding and liability challenges.
Few would argue that giving employees access to a retirement plan is a bad thing. The real debate is the best way to accomplish that. Employers with positive reviews of the state plan appreciate that the state is addressing a potential retirement predicament and providing employers with a new benefits they were unable to offer before. They are also pleased the state is taking responsibility for the plan and that employees can take their accounts with them if they were to change employers. One participant in favor of the program stated, “There really is going to be a retirement crisis in this country, if there already isn’t one…I think we have to do something to help people.”
For those who are aware of Connecticut’s plan to mandate businesses to offer a retirement savings program, their perceptions are largely based on their personal attitudes towards the role of government and the state of Connecticut as well as their experience as employers and small-business owners. Another participant added, “Connecticut lost a whole bunch of money for our teachers. They had a Connecticut-based program, and they lost all of the money.”
The study is based on a series of four focus groups consisting of business owners or executives who would be responsible for decisions regarding defined contribution plans, who also did not currently offer retirement plans and had at least five employees. The focus groups took place in Hartford and Stamford, Connecticut. The leaders gathered to discuss a bill passed in May 2016 that established a statewide retirement system. The legislation requires all businesses with five or more employees to offer a retirement plan, either privately or through a state-run program.
For more information on this study, LIMRA members can read, Small-Business Reaction to the Connecticut State Retirement Plan.