Retirement plan coverage at small firms heading higher: Study

Retirement plans will expand greatly among small businesses in coming years, and more employers will add benefits linked to financial wellness, such as emergency savings funds and student loan repayment programs, according to a panel of retirement plan and employee benefits experts polled by Transamerica.

The report said the changes are being driven by employers’ need to attract workers in a tight job market, with 81% saying companies will face just as tough a time in attracting and retaining workers at the end of 2026 as they did last year. And the growth in employee benefits provides an opening for those providing retirement plans and other benefits.

“Growth opportunities abound over the next four years as the labor shortage continues, and the demand for more generous and comprehensive rewards programs rises,” Phil Eckman, president of workplace solutions at Transamerica, said in a statement. “Growing demand and government mandates will place pressure on smaller employers with fewer than 100 employees to offer retirement benefits."

The biggest change that the experts see is the growth in retirement plan availability among small businesses. They predicted that 88% of all employers will provide defined-contribution retirement plans by the end of 2026. That’s in line with the number of bigger businesses that currently provide DC plans, but compares to just 46% of businesses with fewer than 100 workers that offered a plan in 2022.

The experts cited state mandates as a factor driving the greater availability of retirement plans among small businesses. The report notes that as of June, 16 states and two cities had laws requiring some employers to provide retirement plans.

Another area where the experts are expecting growth is in financial wellness benefits, which can range from health savings accounts, emergency savings funds and student loan repayment programs to less familiar offerings like mortgage and rent assistance and credit improvement programs.

By the end of 2026, they forecast that 69% of companies will provide workers with health savings accounts, 56% will offer student loan repayment programs, 43% will have emergency savings funds and 61% will offer mortgage and rent assistance.