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By: Andrea Sears
HARRISBURG, Pa. – Pennsylvania small business owners are concerned that their workers aren’t saving for retirement, according to a new poll by AARP of Pennsylvania.
And the poll shows, the business owners think the state should help.
Nationally, only 1 in 20 workers opens a private retirement account, and the poll shows that almost three-quarters of small businesses in Pennsylvania don’t offer a retirement savings plan to their employees.
According to Ray Landis, advocacy manager for AARP Pennsylvania, 88 percent of those business owners agree that state lawmakers should support a state retirement savings proposal.
“They know that it’s an attraction to getting good employees and keeping good employees, but many small business owners find the costs and the administrative responsibilities of running a retirement savings plan to be prohibitive,” Landis states.
State Treasurer Joe Torsella and a bipartisan task force of state legislators and business leaders are considering options for improving retirement savings, including the creation of a state-run plan for private sector workers.
Landis points out that employees do want to save for retirement, but if that means making regular payments to an individual retirement account, other priorities are likely to come first.
“They are much more inclined to save when there is an automatic payroll deduction from their check,” he explains. “Even if it’s a small deduction, that means that people will save.”
Figures show that workers are 15-times more likely to save if a payroll deduction option is available at work.
States such as Oregon, Illinois and Connecticut have created state-run payroll deduction retirement plans.
Landis points out that plans that enroll everyone but give workers the option of not participating appear to work best.
“The research that AARP has done and the experience of other states shows the participation rate is so much higher in states that offer an opt-out instead of an opt-in,” he states.
There is currently no specific bill to create a retirement savings plan in Pennsylvania, but Landis is optimistic that one may be introduced in the next legislative session.
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