Small Businesses in Massachusetts Support State-Facilitated Retirement Savings Program

Eight in 10 small-business owners in Massachusetts support creation of a state-facilitated retirement savings program that would help private sector workers who don’t have plans through their jobs put money away for retirement, according to a survey conducted from July to September 2023 for The Pew Charitable Trusts.

Research shows that providing an affordable and easily accessible retirement savings option for employees can reduce financial stress on businesses, promote workforce stability, and limit retirees’ reliance on state assistance programs. In addition, surveys have found that business owners want to help their workers prepare for retirement to ensure a more secure future for team members and to foster loyalty and commitment. By offering a way to save, small-business owners demonstrate their commitment to the long-term well-being of their staff, but many say they cannot afford to offer their own plans.

As of late 2023, 15 states have created automated retirement savings programs to help smaller businesses and their employees. In these states, private sector workers without access to a workplace retirement plan are enrolled in the program. The businesses, which can decide to offer their own plans at any time, are required only to provide employee data and facilitate payroll contributions. In Massachusetts, legislation (H.B. 998/S.B. 624) would create such a program.

To understand business views on these initiatives, The Pew Charitable Trusts surveyed 500 Massachusetts small-business owners. The survey, conducted by the research firm SSRS, found that these owners support the idea that the state should facilitate such a retirement savings program:

• Over half (58%) of the Massachusetts businesses surveyed that don’t offer a retirement plan say retirement plans are too costly to set up, and 63% say they are concerned about their ability to operate one.
• 81% agree that state lawmakers should do more to help Massachusetts residents save for retirement, with 36% saying the Legislature should do “a lot more.”
• 80% say they would support a savings initiative that would automatically enroll workers (who could opt out at any time) into a payroll deduction program; 29% say they would strongly support it. Among businesses that belong to the state Chamber of Commerce or a local chamber of commerce, or to the National Federation of Independent Business, 81% say they support an automated savings program.

Massachusetts small-business owners worry about worker retirement security

Business owners expressed concerns about their employees’ financial security. In addition, the lack of a means to routinely save has other far-reaching effects. Employers know that when workers are preoccupied with financial worries, their productivity and engagement may decline, affecting the overall efficiency of business operations. According to the survey, 69% say they worry that their employees will not have enough money when they retire, with 33% saying they are very concerned.

Employers voice concerns over broader fiscal costs of insufficient savings

Beyond the workplace, the consequences of inadequate retirement savings can extend to taxpayers. If employees are unable to save adequately, they may be forced to rely on state-funded social assistance programs after they retire—which can lead to increased state spending and, ultimately, higher taxes for all businesses and residents. In an analysis for Pew, researchers projected that insufficient retirement savings in Massachusetts could cost the state $13.9 billion in additional social assistance over 20 years.

In the survey, most small-business leaders in the state expressed concern as taxpayers that some Massachusetts residents have not saved enough money for retirement and might have to rely on public assistance programs: 40% say they are very concerned, while 41% say they are somewhat concerned.

Retirement programs help level the playing field for small businesses

In today’s job market, potential employees often consider a company’s benefits package, including retirement savings options, when evaluating job offers. Small-business owners know that retirement savings plans help to keep them competitive and attract top talent. In this way, these businesses invest not only in their employees’ future but also in the future success and sustainability of their enterprises.

The survey shows that business owners believe that a retirement savings plan would help level the playing field among various types of employers. In fact, 49% of Massachusetts small-business owners say that the main reason they support the state’s adoption of a program that offers a portable retirement savings program—one that a worker would keep even if changing jobs—was that it would either help small businesses attract and retain quality employees or that it would make the business more competitive.

H.B. 998/S.B. 624, the Massachusetts Secure Choice Savings Program Act, would help small businesses

The legislation that has been proposed in Massachusetts would create an automated savings program that business owners support. The Secure Choice Savings program would boost savings for workers not currently saving routinely for retirement while helping their employers compete with bigger rivals. Meanwhile, taxpayers would benefit from a state population that is better prepared financially for retirement and less likely to rely on government help.

Desiree Hung is an officer and John Scott is a director with Pew’s retirement savings project.