By Allison Ball
As Kentucky State Treasurer, I often speak with small business owners across the commonwealth. These entrepreneurs value the hard work of their employees and recognize that their dreams would not be a reality without the teams that work hard alongside them every day. Many of these business owners desire to provide the best benefits possible to their employees as a sign of gratitude for the work they do.
Unfortunately, the costs of providing retirement benefits often make it impossible for small businesses to afford the retirement plan options currently available to them. According to a survey conducted by Pew, 71 percent of small and medium-sized businesses pointed to prohibitive costs as the leading reason they do not offer retirement plans to their employees. In Kentucky, around 428,000 small business employees do not have access to a retirement plan, according to AARP.
When I was recently on the phone with the White House discussing this issue, I advocated for Kentuckians. My questions focused on how we could ease the financial burden on small businesses in Kentucky seeking to provide retirement benefits to employees. A possible solution could be to reform Association Retirement Plans.
Association Retirement Plans, also known as Multiple Employer Plans, would permit small businesses to band together for purposes of offering retirement plans to their employees. For example, by combining the employees of several businesses to create one retirement plan, these small businesses could benefit from economies of scale as larger businesses do, thereby lowering the cost of providing retirement benefits for their employees.
Association Retirement Plans could help to cure the retirement crisis we are facing across our state for private employees. These plans could ease the burden on small businesses, creating a new way for small business owners to provide important retirement benefits for their employees.
I learned from my conversation with the White House that the federal Departments of Labor and Treasury are currently looking at Association Retirement Plans as a way to reform retirement for small businesses. It is important that Kentuckians have a say in the process. I encourage all small business owners facing this issue and other concerned Kentuckians to engage in the process of reform by providing your comments at the Federal Register website here. The comment period ends on Dec. 24, 2018.
Allison Ball is the Kentucky State Treasurer