Lawmakers in Washington, D.C., quietly took steps in recent months to make it more difficult for employees of small businesses to access retirement plans. They voted to end a U.S. Department of Labor rule that allows local governments to establish publicly administered retirement savings programs for private-sector workers. Fortunately, lawmakers here in Colorado have a chance to give more options to small businesses that don’t offer retirement programs by establishing a public-private partnership that would allow private-sector employees to contribute to an individual retirement savings account through modest payroll deductions.
Recently, a Colorado House of Representatives committee voted to move forward with the Colorado Secure Choice Savings Plan, which would help small business owners offer retirement savings benefits at no added cost to their business. That development is great news, because there is a real need for this type of retirement plan assistance for small employers. In fact, recent polling released by Small Business Majority and AARP Colorado found that three in five Colorado small employers do not currently provide a workplace retirement savings plan, with cost cited as the biggest reason. Among those who do not offer retirement benefits, two-thirds say they would offer a state retirement savings plan, if such a plan were available.
Small business owners know offering benefits like retirement savings makes for a happier and more productive staff, which in turn leads to increased productivity. What’s more, policies like these help level the playing field between small businesses that want to offer retirement benefits but can’t, and their larger counterparts that can. This helps small firms compete for the best employees, and gives employers peace of mind that they are doing what’s best for their workers.
Many small business owners also think of their employees as family, so it’s not surprising they support programs that enable them to foster a happier workforce while protecting their workers and their bottom line. A majority of small business owners in Colorado (58 percent) support a privately managed state retirement savings program that would help small businesses offer employees a way to save for the future. Nearly seven in 10 believe offering such a program makes small businesses more competitive by helping them attract and retain talented employees.
Among the Colorado small business owners who support the plan is Everett Schneider, president of Bedrock Landscaping Materials in Denver. Schneider, who is currently unable to offer his employees a retirement plan, said Secure Choice would go a long way toward helping him attract and retain top talent.
“My biggest challenge is managing employee turnover, but savings programs cut down on attrition by providing staff with a sense of security,” Everett said. “After all, employees who feel secure tend to stick around. What’s more, retention of employees leads directly to profit through increased customer satisfaction, increased productivity and a more pleasant work environment.”
Although a majority of the U.S. Senate voted recently to end the Department of Labor rule that allows local governments to create private-sector retirement savings options, many senators disagreed with that move. Among them is U.S. Sen. Michael Bennet, D-Colo., who encouraged his state to adopt the Secure Choice program in a recent op-ed.
“If passed, the bill would offer the more than 750,000 Coloradans who don’t have workplace retirement plans a chance to save,” Bennet noted.
Small businesses and their employees are struggling to access retirement plans, and the Colorado Secure Choice Savings Plan can help. After all, California, Illinois and Oregon are in the process of implementing similar programs because those states know how important it is for entrepreneurs and workers to save for the future. Colorado lawmakers should do the right thing for small businesses and their employees by creating a Secure Choice program.
Tim Gaudette is the Colorado Outreach Manager for Small Business Majority.