How well do small-business owners know which benefits their employees want? Not very.

In a survey conducted for the Transamerica Center for Retirement Studies, a research unit of Transamerica Life Insurance & Annuity Co., nearly the same percentage of employees and owners ranked health insurance as very important to workers. But 51% of the employees said an employee funded retirement plan was "very important" to them, while only 27% of the owners said their workers would rank such plans as high. And 41% of the employees rated a company funded plan as very important, while only 20% of the owners believed their workers would rate it the same.

As important as such plans are to employees, 76% say they don't know as much as they should about their retirement programs, an 11 percentage-point increase from 2001. The survey also found that the weakened economy hasn't prompted many workers to make changes in the allocation of their retirement funds, possibly because of the employees' admitted lack of knowledge in the area.

Of the 20% who did switch funds in the past year, 66% moved their money into lower-risk funds and 28% switched money out of company stock. Of all those surveyed, 33% said they believed their retirement would now be further away because of the weak economy.

Despite the economic troubles, 73% of small-business workers would choose to have their retirement funds in an employer-matched 401(k) rather than a company-funded pension plan. And more than half the employees prefer work that meets their minimum salary requirements but has excellent retirement benefits over a job with great pay and lousy benefits. Only 29% of the employers thought workers would choose excellent retirement benefits over excellent pay.

Richard Breeden
SMALLTALK
2003