UK experience suggests small-business plan mandate works

Most employers find administration of a retirement plan to be ‘easy,’ and participation in retirement plans rises significantly.

More than 800 small businesses in the United Kingdom that now offer a retirement plan in the wake of a government mandate say that the administration of their plan is “routine” or “easy,” according to a survey conducted by Smart, a Nashville, Tennessee-based technology firm and record keeper.

Based on the survey of UK users of its Smart Pension Master Trust platform, the company found that 94% of businesses with 10 or fewer employees spent an hour or less administering the plan each month. Only 8% reported that plan administration was a “significant additional burden.”

Following legislation in the UK requiring large and small employers to offer a retirement plan, private sector retirement plan participation rose from 42% in 2012 to 86% in 2019, the company said. “The increase in participation was very consistent across all participant groups, including those that are typically the least engaged, such as the young, part-time workers, low earners and those working for micro-employers.”

In a special report it prepared for U.S. policymakers considering auto-IRA legislation, the company said that requiring employers to maintain a retirement plan “can lead to a substantial leap in overall plan participation and retirement coverage for Americans” while not imposing a significant administrative burden.

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