ALBANY, N.Y. – Two thirds of New York small businesses 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 today by AARP New York. The survey showed:
- 68% support (40% “strongly”) legislation to establish a basic, privately-managed, ready-to-go retirement savings plan for their employees that would be administered by the state;
- 80% think state lawmakers should back a plan to make it easier for small business owners to offer a way to save for retirement to their employees – with 56% strongly agreeing;
- 68% of those who do not offer a retirement savings plan for their employees cited excessive cost as an obstacle – more than how complicated or time consuming it would be.
Respondents to the poll were evenly divided among Republicans and Democrats at 24% each, with 18% identifying themselves as independent.
Additionally, a wide-ranging array of organizations signed on to a letter urging Governor Andrew Cuomo to propose a state-administered workplace retirement savings option as part of his 2017-18 state budget proposal next month.
More than half of all private sector employees in New York - including over 60% of Millennials and 67% of Hispanics - lack access to a pension or 401(k) at work as fewer employers are able to offer such benefits. That’s over 3.5 million people according to AARP’s Public Policy Institute.
Yet Americans are 15 times more likely to save for retirement if they have access to employer-sponsored plans. An automatic payroll-deduction option is key to empowering New Yorkers to save for a secure financial future and retirement – and lessen their dependence on public assistance.
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, AARP and others are urging him to propose the kind of auto-enrollment plan favored by most small businesses.
“AARP New York urges Governor Cuomo to help small businesses and millions of mostly middle class private sector workers in New York by providing this effective way for employees to save their own money and create a financially secure future,” said Beth Finkel, AARP New York State Director and SMART Commission member.
“The report released today by AARP clearly shows support from the small business community for New York to start helping people save for retirement. I have authored legislation that I strongly believe can be part of the solution in 2017 to what many believe in our state is a retirement savings crisis,” said Assemblyman Robert Rodriguez (D-East Harlem), chief sponsor of Secure Choice legislation that would establish an automatic enrollment, payroll-deduction plan.
“It has been very clear to me and many of my colleagues in the Legislature that we need to address the lack of access to retirement savings in the workplace,” said Senator Diane Savino (D/I-Staten Island/Brooklyn), the Secure Choice bill’s other lead sponsor. “Legislation that I have introduced creates that access to help people save for retirement. The AARP survey shows strong support from the business community for such a proposal.”
“This would cost businesses next to nothing and would provide a great benefit not only to those companies that can’t afford to offer retirement savings plans but to their employees as well,” said Assemblyman Gary Finch (R-Cayuga), who runs a small funeral home and does provide his employees with a retirement savings plan. “And attracting and keeping good employees is the key to any business’s success.”
“When competing with a large corporation in attracting and retaining an employee, the odds are staggeringly in favor of the large company - the price tag of paid vacation, medical, dental, 401(k), even college tuition is rather intimidating to any small business owner, regardless of their financial stability,” said Laura Kerrone, owner of Psychedelicatessen in Troy. “A program like this can help level the playing field a bit.”
“I think it is incumbent upon small businesses to try and provide their often loyal employees with some ability to plan for their futures,” said Donna Nichols, executive director of the Moreau Community Center in South Glens Falls and a survey respondent. “People are much more likely to save through an employer plan than on their own.”
“It is hard for many small businesses, including ours, to offer this benefit, but we care very deeply about our employees and we think it’s extremely important to provide them a way to save for their futures,” said Sara Pratt, another survey respondent who owns Puzzles Bakery and Café in Schenectady, which is currently unable to offer its employees a retirement savings plan. “We strongly support legislation to create an option that would be easy and inexpensive for small businesses to provide and very effective for their employees.”
“As former public sector employees, the financial security that we enjoy was earned over our working careers,” said Jack McPadden, President of the Retired Public Employees Association (RPEA). “As the Comptroller has pointed out, retirees remain vital contributors to New York's economy. RPEA strongly believes that extending this opportunity to those in the private sector makes sound financial business sense."
RPEA is one of 20 groups that signed a letter urging Cuomo to include auto enrollment in his state budget proposal. Besides AARP, the others are Argentum NY, Asian American Federation, Asian American Legal Defense and Education Fund, Center for Elder Law and Justice, Communications Workers of America District 1, Consumers Union, Federation of Protestant Welfare Agencies, Lifespan, New Economy Project, New York Public Interest Research Group, Presbyterian Senior Services, Regional Aide for Interim Needs, Statewide Senior Action Council, TIAA, True Living Financial, UJA-Federation of New York, Vision Long Island and Young Invincibles.
Five states have already enacted laws creating similar plans: California, Connecticut, Illinois, Oregon, and Maryland. Legislation has been introduced in about 20 additional states.
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. And the department is publishing a follow-up regulation allowing major cities to create such plans. New York City leaders earlier this year expressed interest in establishing a plan at the city level.
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AARP is a nonprofit, nonpartisan organization, with a membership of nearly 38 million that helps people turn their goals and dreams into 'Real Possibilities' by changing the way America defines aging. With staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, AARP works to strengthen communities and promote the issues that matter most to families such as healthcare security, financial security and personal fulfillment. AARP also advocates for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name. As a trusted source for news and information, AARP produces the world’s largest circulation magazine, AARP The Magazine and AARP Bulletin. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. To learn more, visit www.aarp.org or follow @AARP and our CEO @JoAnn_Jenkins on Twitter.