w w w . h a r r i s i n t e r a c t i v e . c o m
©2007, Harris Interactive Inc. All rights reserved.
SBART (Small Business Annual Retirement Trends) Survey for ShareBuilder
October 2007
2
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Contents
Sections
� Background and Methodology 3
� Executive Summary 6
� Personal Retirement Preparation 13
� Employee Benefit Offerings 18
� 401(k) Plan Details 26
� Importance of Retirement Plan Features 35
� Decision-making for Retirement Plans 41
� Employee Retention 47
� 401(k) Plans and Tax Implications 51
� Social Responsibility and Political Considerations 54
� Respondent Profile 57
3
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Background and Methodology
3
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
4
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
� ShareBuilder sought to conduct a survey among small business owners to:
– Generate mass market press about the small business retirement crisis, and establish ShareBuilder as the recognized expert in small business retirement trends
– Gain proprietary insights into small business retirement needs and preparedness
� The 2006 Small Business Annual Retirement Trends (SBART) survey served as a benchmark to track:
– Retirement plan penetration
– Influences on demand for retirement benefits
– Attitudes toward 401(k) plans and benefits
– How small business owners are preparing for their own retirement
– Key retirement plan benefits and features that resonate with target segments
– Insights on particular retirement market trends (e.g. auto-enrollment)
� In 2007 Sharebuilder sought to also survey small business employees to gain insights on their experiences and views in retirement preparation, as well as to provide a comparison against the employer point of view.
Background
5
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
� Harris Interactive conducted an online survey among small business owners and employees between July 26-August 28, 2007
� Qualified respondents:
– US residents, Age 18+
– Employers: Owners/Partners, CEOs/Chairmen or Presidents with 1-50 employees
– Employees: Employed full time at firm with 2-50 employees
� 519 employer interviews were completed
� 1147 employee interviews were completed
� The average interview length was approximately 20 minutes
Methodology – Study Parameters
6
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Executive Summary
6
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
7
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Executive Summary
Employer/Employee Comparison: Employers will retire sooner than employees and are more confident in their retirement savings.
� Employers will retire in about 14 years on average, compared to 21 years for employees (p14).� While more than half of employers are very/somewhat confident in their retirement savings, only about 4 in 10
employees report being that confident (p14).� Employers and employees of small business firms are most confident, with more than 7-in-10 employers and half of
employees feeling very/somewhat confident in their retirement savings (p14).
Most employers interviewed do not offer retirement benefit plans.
� More than 6-in-10 employers do not offer retirement benefits (p24).
Yearly Comparison: A similar proportion of employers reported not offering retirement benefit plans in 2006 (65% v. 63% in 2006, p25).
� However, employers of small businesses are much more likely to offer retirement benefits, with nearly 7-in-10 doing so (p24).
Employees are most likely to rely on 401(k) plans to fund their retirement while most employers intend to rely on IRAs and personal investments.
� More than 4-in-10 employees report that the investment product they intend to rely on to fund their retirement is a 401(k) plan (p17).
� More than half of employers are likely to rely on IRAs to fund their retirement and more than 4-in-10 will depend on personal investments through stocks or mutual funds (p17).
Employer/Employee Comparison: Employees will rely on 401(k)s to fund their retirement more so than employers, while employers will depend on IRAs, stocks and mutual funds with greater frequency (p17).
Retirement Benefits Offered and Owned
Personal Retirement Preparation
8
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Executive Summary
Employer/Employee Comparison: In general, both employers and employees are not very satisfied with their retirement benefits
� Only one-quarter of employers and employees report being extremely/very satisfied with the retirement benefits offered by their company (p27).
However, satisfaction with retirement benefits increases at larger firms.� Nearly 4-in-10 employers and employees at small businesses are extremely/very satisfied with their retirement
benefits compared to about 20% at micro businesses (p27).
Satisfaction with Benefits
Employers of larger firms feel more responsibility to offer retirement plans.
� In fact, approximately half of employers at micro businesses feel no responsibility while three-quarters of employers at small businesses feel they have a strong/some level of responsibility to offer a retirement benefits plan (p28).
Employees feel that their employers have a responsibility to offer retirement plans.� Among employees, a majority feel that employers are strongly/somewhat obligated to provide retirement benefits
plans (64%, p28). � Even more employees from small businesses, more than 7-in-10, feel their employers have this responsibility (p28).
Employer/Employee Comparison: Employees feel that employers are obligated to provide retirement benefit plans more so than employers do (64% of employees v. 50% of employers, p28).
Responsibility and Obligation to Offer 401(k) Plans
9
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Executive Summary
Employers/employees report that the most important feature for 401(k) plans is “ease of administration/use”.
Employer/Employee Comparison: In determining the relative importance of various features of a 401(k) plan, “ease of administration” is rated as the most important feature by employers, while the corresponding “ease of use” is rated most important by employees (p42 and p44).
� In fact, among employers who would recommend their 401(k) provider, more than 8-in-10 indicate that the characteristic guiding their recommendation is “easy to administer plan” (p50).
� Online access is also very important to employers with “offers online access to manage 401(k) investments” and “offers online access to administer plan” ranking as the next most important features of 401(k) plans (p42 and p44).
� Offering exchange-traded funds is the least important feature of 401(k) plans for both employers and employees (p42 and p44).
Rating Retirement Plan Features
Employers Who Do Not Offer a 401(k) PlanNearly half of employers who do not offer a 401(k) plan never intend to do so (p32).
Yearly Comparison: The same proportion of employers reported never intending to offer a 401(k) plan in 2006 (47% in both 2007 and 2006, p38).
� The top reason for not offering a 401(k) plan, reported by nearly half of employers who intend to never offer one and about 60% of employers who intend to wait three years, is an inadequate amount of employees to make it worthwhile (p39).
� The financial considerations that prevent employers from offering a 401(k) include an inability to afford a company match, uncertain/unstable business and management fees that are too high (p39).
The leading reason to reconsider offering a 401(k) plan is the incentives provided by tax breaks, reported by more than a quarter of small business employers (26%, p38).
Employers who do not offer a 401(k) expect annual participant fees to be much higher than they really are and nearly half do not know what to expect in the cost of administration fees (p36).
10
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Employer/Employee Comparison: Employees are more concerned with benefits than employers and are more likely to consider them crucial in attracting and retaining talent.
� Health insurance, profit-sharing/bonuses, defined contribution plans, free parking, disability insurance, life insurance, pensions, tuition reimbursement, stock options and personal banking services are all more likely to be considered crucial by employees than employers (p21).
In keeping with their preferences, employees are more likely to work at companies which offer these benefits.� The larger the company, the more likely benefits are offered (p21).� Owner-only businesses are the least likely to offer these benefits (p22).
Executive Summary
Benefits Required to Attract Employees
Employee RetentionOn average, it costs about $6,000 to replace an employee (p55).
The greatest cost when replacing an employee is the time to get new hires up to speed (67%, p55).� This cost is even greater at small business where more than 8-in-10 employers report that time spent training new
employees at the expense of driving their business is the main cost in replacing an employee (p55).
But ultimately, employers feel that most employees could not be retained with any form of benefit (p54).� Half of employers feel that no benefit would prevent their employees from leaving (p54). � Only a quarter of employers believe that healthcare benefits and more flextime may prevent employees from leaving
(p54).
About 4-in-10 employees would leave their current job for one that provided a 401(k) plan (p54).
11
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Executive Summary
Owner-only Firm DifferencesOwner-only firms are less likely to offer employee benefits.
� In particular, owner-only firms are least likely to offer health insurance, flex time, profit-sharing/bonuses, defined contribution plans, free parking, life insurance, tuition reimbursements, legal services and personal services (p22).
Owner-only firms are least likely to offer 401(k) plans (8% offer them compared to 51% of small business firms, p25).� Additionally, over 7-in-10 owner-only firms do not offer retirement benefit plans (p25).
Owner-only firms have different experiences in the selection and administration of their retirement benefits plans.� While about half of employers at owner-only firms rely on themselves to select a retirement benefits plan provider, on par
with larger firms, they are less likely to rely on financial advisors, CPAs, lawyers, other business owners, insurance brokers and employees (p48).
� When selecting a 401(k) plan provider, owner-only firms are least likely to describe ease of administration/use as a critical criteria in their selection (p52).
� Owner-only firms are most uncertain of the costs of administration fees (62% v. 48% and 38% for micro and small business firms respectively, p37).
12
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Detailed Findings
12
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Key
Owner-only firm: 1 employer (no employees)Micro business: 2-25 employeesSmall business: 26-50 employees
+/ - Statistically significant increase/decrease compared to 2006 at the 95% confidence level
▲/▼ Statistically higher/lower result at the 95% confidence level when compared to total employers or total employees
▲/▼ Statistically higher/lower result for total employers at the 95% confidence level when compared to total employees
Note:When comparing results among the employer and employee segments, owner-only firms are omitted to make results more comparable. When employer data is trended, owner-only results are presented to allow comparison to the previous year’s results.
13
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Personal Retirement Preparation
13
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
14
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
53%
52%
72%
41%
39%
50%
Total Employer (N=361)
Micro Business (N=260)
Small Business (N=101)
Total Employee (N=1147)
Micro Business (N=715)
Small Business (N=432)
BASE: ALL RESPONDENTSQ510 How long until you personally plan to retire?
Q505 Now considering your future retirement, how confident are you that you are saving enough for retirement?
Confidence in Retirement Savings
Top 2 Box % – Very/Somewhat Confident
▲
▲
▲
20.5Total Employee (N=1147)
15.1Small Business (N=101)
19.1Small Business (N=432)
20.9Micro Business (N=715)
13.7Micro Business (N=260)
13.7Total Employer (N=361)
Average Years Until Retirement
� On average, employers expect to retire sooner than employees (in about 14 years for employers v. 21 years for employees).
� Employers are more confident in their retirement savings than employees (53% of employers v. 41% of employees).
� Employers and employees from larger firms are most confident in their retirement savings (72% for employers from small business firms v. 53% for total and 50% for employees from small business firms v. 41% for total).
Time Until Retirement and Confidence in Retirement Savings
Years
15
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
16
15
16
13
15
16
12
18
35
38
30
29
36
42
60
47
2007 (N=519)
2006 (N=507)
2007 (N=158)
2006 (N=151)
2007 (N=260)
2006 (N=254)
2007 (N=101)
2006 (N=102)
Very confident Somewhat confident
Small Business
Micro Business
Owner-only
Total Employer
Employers' Confidence in Their Retirement SavingsBase: Employers
BASE: ALL RESPONDENTSQ510 How long until you personally plan to retire?
Q505 Now considering your future retirement, how confident are you that you are saving enough for retirement?
51%
53%
52%
58%
64%
72%
42%
46%
(N=102)
(N=254)
(N=151)
(N=507)
(N=101)
(N=260)
(N=158)
(N=519)
14.2 Yrs14.9 YrsOwner-only
20062007Average Years Until RetirementBase: Employers
15.1 Yrs
13.7 Yrs
14.2 Yrs
16.5 YrsSmall Business
12.9 YrsMicro Business
13.4 YrsTotal Employer
� Employers at owner-only firms expect to retire along a similar timeline with employers from micro businesses and small business firms.
� Confidence in retirement savings has remained stable compared to 2006.
Trending: Time Until Retirement and Confidence in Retirement Savings
▲▲
16
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
BASE: ALL RESPONDENTSQ505 Now considering your future retirement, how confident are you that you are saving enough for retirement?
Gender Differences: Confidence in Retirement Savings
51%
41%
58%
39%
41%
43%
Total Employer (N=519)
Male (N=332)
Female (N=187)
Total Employee (N=1147)
Male (N=523)
Female (N=624)
Confidence in Retirement Savings
Top 2 Box % – Very/Somewhat Confident
▲
▼
▲
� Male business owners are most confident in their retirement savings (58%).
� Among employees, confidence in retirement savings is similar between genders.
17
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Funding for Retirement
BASE: ALL RESPONDENTSQ515 Which of the following investment products do you currently own that you
plan to use at least in part to fund your retirement? Select all that apply.
� Employees are most likely to use 401(k) accounts to fund their retirement (45%) while employers are most likely to use IRAs and personal investments in stocks and mutual funds (51%, 47% and 44% respectively).
� Employers and employees from larger firms are most likely to rely on 401(k)s.
None
Money market funds
401(k) account
Mutual funds
Stocks
IRA
Profit-sharing plan
Annuity
Bonds
Certificates of Deposit
RE invest. (not home)
Other
Exchange-traded funds
%Micro Business
%%%%%Small BusinessTotal EmployeeSmall BusinessMicro BusinessTotal Employer
51
47
44
34
32
35
28
17
16
6
2
13
11
50
46
43
32
32
34
28
17
16
5
2
13
12
59
63
56
55
38
44
29
23
14
19
5
15
3
39
23
25
45
17
10
17
9
8
9
1
11
18
42
22
25
38
16
10
17
9
6
9
1
10
20
33
25
24
68
18
10
17
9
12
12
1
14
12N=361 N=1147 N=715N=260 N=432N=101
▲
▲
▼
▼
▲
▲
▲
▲
▲
▲
▲
▼
▲
▲
▲
▲
▲
▼
▼
▼
▲
▲
▲
Employers Employees
18
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Trending: Funding for Retirement
BASE: ALL RESPONDENTSQ515 Which of the following investment products do you currently own that you plan to use at least in part to
fund your retirement? Select all that apply.
Investment Products Employers' Currently Own that They Plan to Use to Fund Their Retirement
Bonds
Certificates of Deposit
RE invest. (not home)
Money market funds
401(k) account
Mutual funds
Stocks
IRA
Other
Exchange-traded funds
None
Profit-sharing plan
Annuity
Small BusinessMicro BusinessOwner-onlyTotal Employer
51%
45%
43%
33%
31%
30%
24%
17%
15%
6%
3%
12%
13%
48%
44%
39%
25%
33%
32%
26%
16%
13%
5%
4%
12%
15%
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
51%
41%
41%
31%
30%
22%
16%
17%
13%
6%
4%
10%
16%
44%
38%
36%
23%
26%
21%
21%
13%
13%
4%
4%
12%
21%
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
50%
46%
43%
32%
32%
34%
28%
17%
16%
5%
2%
13%
12%
49%
45%
40%
24%
36%
36%
27%
15%
12%
4%
3%
12%
13%
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
59%
63%
56%
55%
38%
44%
29%
23%
14%
19%
5%
15%
3%
49%
66%
54%
59%
42%
48%
45%
35%
26%
23%
11%
9%
1%
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
20072006
2007 N=5192006 N=507
2007 N=1582006 N=151
2007 N=2602006 N=254
2007 N=1012006 N=102
� As in 2006, IRAs remain the top investment product to fund retirement among employers.
� Employers are more likely to own 401(k)s to help fund their retirement compared to 2006 (33% v. 25%).
� Employers from owner-only firms are less likely to rely on real estate investments and Certificates of Deposits.
----
----
++++ ++++
▼
▼
▲
▲
▲
▲
▲
▲
▲
▼
Employers
19
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Gender Differences: Funding for Retirement
BASE: ALL RESPONDENTSQ515 Which of the following investment products do you currently own that you
plan to use at least in part to fund your retirement? Select all that apply.
� Male business owners are more likely to own a 401(k) plan than female employers (38% v. 25%).
� Male employers are also more likely to own other investments to fund their retirement (IRAs, stocks, mutual funds and real estate).
None
Money market funds
401(k) account
Mutual funds
Stocks
IRA
Profit-sharing plan
Annuity
Bonds
Certificates of Deposit
RE invest. (not home)
Other
Exchange-traded funds
%Male
%%%%%FemaleTotal EmployeeFemaleMaleTotal Employer
51
45
43
33
31
30
24
17
15
6
3
12
13
55
53
49
38
34
36
23
19
16
8
3
13
11
44
32
32
25
26
21
25
14
12
2
3
11
16
39
23
25
45
17
10
17
9
8
9
1
11
18
43
26
27
46
18
10
20
11
8
9
1
11
16
33
17
22
45
14
9
12
7
7
10
11
22N=519 N=1147 N=523N=332 N=624N=187
Employers Employees
<1%
▼
▼
▼
▼
▼
▼
▲
▲
▲
▲
▲
▲
▲
▲
▲
▼
▼
▼
▲
▲
▲
▲
▲
▲
▲
▼
▼
▼
▼
20
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Employee Benefit Offerings
20
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
21
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Employee Benefits: Crucial v. Offered
Personal banking srvcs
Legal services
Executive benefits
Child-care subsidies
Free parking
Defined contrib. plan
Profit-sharing/Bonus
Flex time
Health insurance
Stock options
Tuition reimbursement
Pension
Life insurance
Disability insurance
Financial planning
On-site day care
%Micro Business
%%%%%Small BusinessTotal EmployeeSmall BusinessMicro BusinessTotal Employer
66
52
38
35
27
26
24
18
12
8
8
10
9
7
4
3
34
46
25
19
40
10
15
4
9
2
4
7
1
7
3
5
BASE: ALL RESPONDENTS Q950 Which of the following benefits do you feel are crucial for an employer to offer to attract and retain employees? Select all that apply.
Q955 Which of the following benefits are offered to employees at your company? Select all that apply.
65
53
38
35
27
26
23
19
12
8
9
10
9
7
5
3
32
46
24
17
39
9
13
4
8
2
4
7
1
6
4
5
81
45
34
44
29
30
30
12
17
8
4
9
9
18
8
9
74
50
37
42
69
35
44
7
16
7
4
9
6
14
4
10
86
57
52
57
35
41
38
37
26
14
9
11
11
11
6
7
68
41
27
36
61
27
35
13
13
5
2
4
2
6
6
4
85
58
53
54
37
42
35
37
24
14
10
12
11
11
7
7
63
39
24
29
62
20
27
12
9
4
3
4
2
6
6
3
89
55
50
69
30
40
49
39
34
13
6
11
10
10
5
8
85
46
36
60
58
48
59
16
27
8
7
1
7
8
4
Crucial Offered
<1%
N=361 N=1147 N=715N=260 N=432N=101
� Employees find health insurance, defined contribution plans, flex time and profit-sharing/bonuses most crucial for an employer to offer to attract employees. These benefits are also among the most likely to be offered.
� Employers describe health insurance and defined contribution plans as crucial far more often than they actually offer them to employees (the disparities are 32% and 16% respectively).
� Employees deem profit-sharing/bonuses, pension plans and defined contribution plans as crucial more often than they’re offered (25%, 24% and 21%).
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲▲▲
▲▲
▼
▼
▼▼
▼
▼▼
▼
▼
▼
▲
▲▲
▲▲
▲
▲
▲
▲
▲▼
▼▼
▼▼
▼
▼▼
▼▼
▼
▼▼
▼
▼
▼
▼
▼
▼
▼
▲
Employers Employees
22
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Micro Business
Personal banking srvcs
Legal services
Executive benefits
Financial planning
Disability insurance
Defined contrib. plan
Profit-sharing/Bonus
Flex time
Health insurance
Stock options
Tuition reimbursement
Pension
Life insurance
Free parking
Child-care subsidies
On-site day care
Are Offered to Employees Crucial for an Employer to Offer
%Owner-only
%%%%%%
Small BusinessTotal
Small Business
Micro BusinessOwner-onlyTotal Employers Only
BASE: ALL RESPONDENTS Q950 Which of the following benefits do you feel are crucial for an employer to offer to attract and retain employees? Select all that apply.
Q955 Which of the following benefits are offered to employees at your company? Select all that apply.
2007 2006
15
18
9
11
6
16
5
3
3
1
4
1
5
3
0
1
14
15
7
9
5
17
6
3
1
3
1
0
2
0
2
0
68
52
40
39
27
27
24
21
15
11
10
9
9
8
5
3
78
43
34
44
26
25
17
19
13
10
11
11
5
5
3
2
73
50
46
48
29
28
25
28
20
16
14
10
8
9
4
2
82
46
34
54
36
27
15
29
14
15
15
15
7
7
3
2
65
53
38
35
26
27
23
19
12
8
9
9
10
7
5
3
75
42
34
38
21
24
17
12
11
6
9
9
4
4
2
1
81
45
34
44
30
29
30
12
17
8
4
9
9
18
8
9
85
36
34
66
28
27
32
35
22
21
11
13
14
11
10
6
28
37
20
16
9
33
12
4
7
2
4
1
6
5
3
4
31
28
18
17
9
31
14
4
7
3
5
1
4
3
2
2
32
46
24
17
9
39
13
4
8
2
4
1
7
6
4
5
36
34
22
17
10
37
15
4
8
2
7
1
4
3
2
32007 N=5192006 N=507
2007 N=5192006 N=507
N=158N=151
N=158N=151
N=260N=254
N=260N=254
N=101
N=102
N=101
N=102
74
50
37
42
35
69
44
7
16
7
4
6
9
14
4
10
68
34
32
55
23
44
40
24
18
10
4
9
6
11
6
4
� The top benefits found crucial to attract/retain employees according to employers (health insurance, flex time, profit-sharing/bonus and defined contribution plan) and the benefits most offered (flex time, free parking and health insurance) remain unchanged compared to 2006.
� Within this top tier, there has been movement with flex time (52% v. 43% in 2006) and profit-sharing/bonuses (40% v. 34% in 2006) deemed more crucial and flex time offered more (37% v. 28% in 2006).
� Owner-only firms offer less benefits than larger firms.
Trending: Employee Benefits- Crucial v. Offered
++++
++++
++++
----
----
----
----
----
----
++++
++++
++++
++++
++++
++++
++++
++++++++
++++
++++
▲ ▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲▲
▲ ▲
▲
▲
▲
▲
▲
▲
▲
▲
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
23
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Gender Differences: Employee Benefits Crucial v. Offered
� Female employers and employees rate more benefits as crucial than their male counterparts.
� Males and females describe defined contribution plans as similarly crucial (nearly 40% for employers and 60% among employees).
Personal banking srvcs
Legal services
Executive benefits
Child-care subsidies
Free parking
Defined contrib. plan
Profit-sharing/Bonus
Flex time
Health insurance
Stock options
Tuition reimbursement
Pension
Life insurance
Disability insurance
Financial planning
On-site day care
%Male
%%%%%FemaleTotal EmployeeFemaleMaleTotal Employer
68
52
40
39
27
27
24
21
15
11
10
9
9
8
5
3
28
37
20
16
33
9
12
4
7
2
4
6
1
5
3
4
BASE: ALL RESPONDENTS Q950 Which of the following benefits do you feel are crucial for an employer to offer to attract and retain employees? Select all that apply.
Q955 Which of the following benefits are offered to employees at your company? Select all that apply.
64
47
42
38
22
27
23
18
13
11
6
8
7
10
3
3
31
35
22
18
28
9
13
4
7
2
2
7
1
6
3
4
76
59
37
41
37
28
25
27
18
11
18
11
14
5
8
2
24
41
16
13
40
8
10
2
6
2
8
5
2
4
2
3
86
57
52
57
35
41
38
37
26
14
9
11
11
11
6
7
68
41
27
36
61
27
35
13
13
5
2
4
2
6
6
4
83
52
52
57
31
41
36
35
23
13
5
10
8
12
6
6
68
36
28
34
55
26
33
11
14
5
5
1
6
5
3
Crucial Offered
N=519 N=1147 N=523N=332 N=624N=187
Employers Employees
<1%
▲
▼ ▲
▲
▲
▲
▼ 90
66
52
57
42
41
42
41
31
16
15
14
16
9
7
9
70
48
26
40
71
28
37
16
12
5
6
4
3
6
8
5
▲
▲
▲
▲ ▲
▲
▲
▲
▲
▲
▲▲
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
▼
24
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Small Business (N=101)
Other
Micro Business (N=260)
None
Profit-sharing plan
Other self-funded plan
Pension plan
401(k) plan
Total Employer (N=361)
51%
6%
11%
23%
3%
31%
16%
4%
16%
10%
2%
62%
Retirement Benefit Plans Offered and Owned
Other self-funded plan
Other
Pension plan
Profit-sharing plan
401(k) plan
Small BusinessMicro BusinessTotal Employee
Employees
Currently offered by employer
Currently have with employer
39%
14%
13%
10%
5%
31%
10%
9%
8%
6%
BASE: ALL RESPONDENTS
Q535 Now, thinking about [your/the
business]/[the company at which you currently
work], which of the following
retirement benefit plans do you currently offer/does your
employer offer? Select all that apply.
Q537 Which of the following retirement benefit plans do you
currently have through your current employer?
Select all that apply.
32%
12%
12%
10%
5%
24%
8%
8%
9%
5%
65%
20%
16%
8%
7%
54%
17%
11%
6%
7%
Currently offered to employees
Retirement Benefit Plan Currently OfferedBase: Employers
Retirement Benefit Plan Currently Offered/OwnedBase: Employees
N=1147 N=715 N=432
� A majority of employers report not offering retirement benefit plans (62%).
� 401(k) plans are the most offered and owned retirement benefit plans among employees (39% are offered and 31% own a 401(k)).
� Employees from larger firms are most likely to be offered and own 401(k) plans.
▼
▲
▲
▲
▲
14%
4%
17%
9%
2%
64%
▲
▼
▼
▼
▼
▼
▼
▲
Employers
▲
25
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Other
Profit-sharing plan
Other self-funded plan
None
Pension plan
401(k) plan
Small BusinessMicro BusinessOwner-onlyTotal Employer
13%
4%
15%
8%
2%
65%
14%
4%
18%
9%
2%
63%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007 N=5192006 N=507
8%
4%
13%
5%
1%
72%
6%
2%
18%
1%
2%
76%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
14%
4%
17%
9%
2%
64%
15%
4%
17%
10%
2%
61%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
51%
6%
11%
23%
3%
31%
52%
24%
27%
30%
1%
19%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
Trending: Retirement Benefit Plans Offered
BASE: ALL RESPONDENTSQ535 Now, thinking about [your/the business]/[the company at which you currently work],
which of the following retirement benefit plans do you currently offer/does your employer offer? Select all that apply.
Retirement Benefit Plan Currently Offered
N=158N=151
N=260N=254
N=101N=102
� Smaller firms are more likely to not offer retirement benefit plans (72% and 64% for owner-only and micro business firms v. 31% of small business firms).
� Small business employers indicate a decline in the amount of pension plans (6% v. 24%) and other self-funded plans (11% v. 27%) compared to 2006.
----
----
++++
++++
▼ ▲
▲
26
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Female (N=624)
Other
Male (N=523)
None
Profit-sharing plan
Other self-funded plan
Pension plan
401(k) plan
Total Employer (N=1147)
40%
15%
9%
14%
5%
38%
39%
11%
10%
14%
6%
39%
39%
13%
10%
14%
5%
39%
Female (N=187)
Other
Male (N=332)
None
Profit-sharing plan
Other self-funded plan
Pension plan
401(k) plan
Total Employer (N=519)
9%
1%
13%
4%
2%
73%
16%
6%
17%
11%
2%
61%
13%
4%
15%
8%
2%
65%
Gender Differences: Retirement Benefit Plans Offered and Owned
BASE: ALL RESPONDENTS
Q535 Now, thinking about [your/the
business]/[the company at which you currently
work], which of the following
retirement benefit plans do you currently offer/does your
employer offer? Select all that apply.
Currently offered to employees
Retirement Benefit Plan Currently OfferedBase: Employers
� Female employers are more likely to not offer a retirement benefit plan.
� 401(k) plan offerings are similarly low among male and female employers.
Employers
Currently offered by employers
Retirement Benefit Plan Currently OfferedBase: Employees
Employees
▲
▼
▲
▼▲
▲▼
▼
▼
▼
27
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Satisfaction with Benefits
BASE: ALL RESPONDENTS Q960/Q965 How satisfied are you with the retirement/healthcare benefits offered by your company?
Satisfaction with Retirement Benefits
Top 2 Box % – Extremely/Very satisfied
25%
24%
37%
25%
21%
36%
Total Employer (N=361)
Micro Business (N=260)
Small Business (N=101)
Total Employee (N=1147)
Micro Business (N=715)
Small Business (N=432)
� Satisfaction with retirement benefits is low (only one-quarter of employers and employees are extremely/verysatisfied). This is similar to 2006 for employers.
� Employers and employees from larger firms are most satisfied with their retirement benefits.
� Although small business owners are the most satisfied, they are less satisfied with retirement benefits compared to 2006 (37% v. 52% are extremely/very satisfied).
▲
▲
▼
Satisfaction with Retirement Benefits
Top 2 Box % – Extremely/Very satisfied
23%
20%
24%
37%
24%
16%
26%
52%
2007 (N=519)
2006 (N=507)
2007 (N=158)
2006 (N=151)
2007 (N=260)
2006 (N=254)
2007 (N=101)
2006 (N=102)Small Business
Micro Business
Owner-only
Total
---- ▲
28
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
24% 24% 25%
40% 37%47%
Total Employees
(N=1147)
Micro Business
(N=715)
Small Business
(N=432)
Somewhat agree
Strongly agree
18% 18%26%
32% 31%
49%
Total Employers
(N=361)
Micro Business
(N=260)
Small Business
(N=101)
Some
Responsibility/Obligation
Strong
Responsibility/Obligation
Obligations to Offer Retirement Plans
BASE: EMPLOYEESQ556 How much do you agree or disagree that every employer is obligated to offer a retirement benefits plan?
BASE: OWNERSQ560 Thinking about your role as [the owner of/someone in charge of running] a small business, which of the following best
describes the level of responsibility/obligation you feel about offering your employees a 401(k) or other retirement plan?
Employees' Level of Agreement that Every Employer Is Obligated to Offer a Retirement Benefits Plan
Level of Responsibility/Obligation Employers Feel Toward Offering Employees a 401(k) or Other Retirement Plan
Employers Employees
64% 61%
73%
50%▲
▲
� Employers and employees from larger firms are most likely to believe that business owners are obligated to provide retirement benefits.
� A majority of all employees feel that employers are strongly/somewhat obligated to provide some form of retirement plan (61% for micro business employees and 73% for small business employees).
49%
75%▲
▲
▲
▼
29
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
No Responsibility/Obligation
Some Responsibility/Obligation
Strong Responsibility/Obligation
Small BusinessMicro BusinessOwner-onlyTotal Employer
26%
49%
26%
32%
51%
17%
2007
2006
2007
2006
2007
2006
Trending: Obligation to Offer 401(k) Plans by Employers
� Employers at owner-only and micro business firms have similar feelings- more than half feel no obligation to offer a 401(k) plan.
BASE: OWNERS
Q560 Thinking about your role as [the owner of/someone in charge of running] a small business, which of the following best describes the level of responsibility/obligation you feel about offering your employees a 401(k) or other retirement plan?
Level of Responsibility/Obligation Employers Feel Toward Offering Employees a 401(k) or Other Retirement Plan
20%
30%
50%
17%
37%
46%
2007
2006
2007
2006
2007
2006
21%
28%
51%
17%
31%
52%
2007
2006
2007
2006
2007
2006
18%
31%
51%
15%
40%
45%
2007
2006
2007
2006
2007
2006
N=519N=507
N=158N=151
N=260N=254
N=101N=102
-------- ▲
▼
30
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
24% 22%28%
40%38%
42%
Total Employees
(N=1147)
Male (N=523) Female (N=624)
Somewhat agree
Strongly agree
20% 22%16%
30% 30%31%
Total Employers
(N=519)
Male (N=332) Female (N=187)
Some
Responsibility/Obligation
Strong
Responsibility/Obligation
Gender Differences: Obligations to Offer Retirement Plans
BASE: EMPLOYEESQ556 How much do you agree or disagree that every employer is obligated to offer a retirement benefits plan?
BASE: OWNERSQ560 Thinking about your role as [the owner of/someone in charge of running] a small business, which of the following best
describes the level of responsibility/obligation you feel about offering your employees a 401(k) or other retirement plan?
Employees' Level of Agreement that Every Employer Is Obligated to Offer a Retirement Benefits Plan
Level of Responsibility/Obligation Employers Feel Toward Offering Employees a 401(k) or Other Retirement Plan
Employers Employees
64% 60%
70%
50%
� 7-in-10 female employees believe that employers are obligated to offer a retirement benefits plan. However, 40% of male employees disagree.
� The level of obligation to offer a 401(k) plan is similar across gender for employers (about 50%).
52%47%
▲
▼
31
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
401(k) Plan Details
31
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
32
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
BASE: OWNERS WHO HAVE 401(k) PLAN AND HAVE PART-TIME EMPLOYEES
Q600 At your company, do you allow part-time employees to participate in your 401(k) plan?BASE: OWNERS WHO HAVE 401(k) PLAN
Q605 Of those employees who are eligible for your 401(k) plan, approximately what
percentage are contributing?BASE: OWNERS WHO HAVE
COMPANY MATCHQ615 How much do you match for every $1
the employee contributes to the plan?Q625 How long does it take for an employee’s
contributions to become fully vested?
BASE: OWNERS WHO HAVE FIXED MATCHES OR RATCHETED
Q620 What is the highest percentage contribution to which you apply your company
match?
$0.58$0.57$0.57Mean ($0.25-$1)
(N=26*)(N=21*)(N=47)
5.6%8.6%8.0%Highest Percentage Contribution to Which Company Match Is Applied (Mean)
(N=17*)(N=14*)(N=31)
2.7 Yrs3.0 Yrs2.9 YrsLength of Time Before Employee’s Contributions Become Fully Vested (Mean)
(N=52)(N=40)(N=92)
37%16%20%Allow Part-time Employees to Participate in 401(k) Plan
SmallBusiness
Micro Business
Total EmployerBase: Employers
(N=38)(N=32)(N=70)
54%57%56%Percentage of Eligible Employees Who Are Contributing to 401(k) Plan (Mean)
19%26%25%$0.25
15%9%10%$0.50
0%7%5%$0.75
16%17%17%
(N=26*)(N=21*)(N=47)
$1
Level of Match for Every $1 the Employee Contributes to the Plan
10%
1%
8%
24%
8%
0%
7%
26%
15%
4%
15%
15%
Ratcheted
Dollar-based
Discretionary match
Other amount
� Only 2-in-10 employers allow part-time employees to participate in their 401(k) plan- although nearly 40% of small business firms allow part-time employees to participate.
� Employers report that approximately 60% of eligible employees contribute to their 401(k) plans.
� The average contribution that employers provide as a company match is 8%.
� Employers match about $0.60 on average for each dollar contributed by their employees to the company 401(k) plan.
401(k) Plan Participation, Contribution Matching and Vesting
▲
*Small base size
Employers
33
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
None of these
Contribute to the plan even if employees don’t
Emails about the plan and the options within it
Auto-enrollment
Profit sharing in 401(k) plan
Education materials about the plan and/or investing
Meeting explaining the plan and the options within it
Some form of co. match to employee contributions
Small BusinessMicro BusinessTotal Employer
49%
47%
46%
28%
18%
20%
17%
18%
49%
43%
43%
25%
18%
19%
17%
22%
401(k) Plan Encouragement
BASE: OWNERS WHO HAVE 401(k) PLANQ610 Which of the following do you have to encourage employee participation in your 401(k) plan? Select all that apply.
Have the Following to Encourage Employee Participation in the 401(k) Plan
Base: Employers with 401(k)
50%
67%
58%
37%
19%
25%
13%
4%
N=92 N=40 N=52
� Matches to employee contributions and meetings to explain 401(k) plans/options are used most often to encourage employee participation (49% and 47% respectively).
� Employers from larger firms are most likely to rely on meetings and education materials to encourage employee participation.
� Nearly 2-in-10 employers offer none of the encouragements.
▼
▲
▲
▲
▲
▼
Employers
34
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Owner-Only
None of these
Contribute to the plan even if employees don’t
Emails about the plan and the options within it
Auto-enrollment
Profit sharing in 401(k) plan
Education materials about the plan and/or investing
Meeting explaining the plan and the options within it
Some form of co. match to employee contributions
Small BusinessMicro BusinessTotal Employer
15%
8%
0%
8%
23%
0%
8%
46%
0%
11%
22%
11%
11%
11%
0%
67%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
49%
43%
43%
25%
18%
19%
17%
22%
37%
50%
49%
33%
16%
14%
18%
27%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
Trending: 401(k) Plan Encouragement
42%
39%
37%
24%
19%
16%
15%
24%
33%
46%
47%
36%
17%
16%
17%
27%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
BASE: OWNERS WHO HAVE 401(k) PLANQ610 Which of the following do you have to encourage employee participation in your 401(k) plan? Select all that apply.
Have the Following to Encourage Employee Participation in the 401(k) Plan
Base: Employers with 401(k)
50%
67%
58%
37%
19%
25%
13%
4%
41%
58%
58%
63%
26%
26%
26%
0%
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
2007 N=1052006 N=100
2007 N=402006 N=38
2007 N=522006 N=53
----
� Owner-only firms are least likely to offer 401(k) plan encouragements, with nearly half offering none (46%). Bear in mind, the base size for owner-only firms who have a 401(k) plan is small.
2007 N=13*2006 N=9*
*Small base size
▼
▲
▲
▲
▲
▲
35
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
19%
23%
21%
25%
10%
18%
10%
24%
29%
10%
401(k) Plan Contributions
BASE: HAVE 401(k) PLANQ635 What percentage of your salary do you personally contribute to your 401(k) plan?
Percentage of Salary Contributed to 401(k)Base: Employers/Employees with 401(k) Plan
� Employers contribute more to their 401(k) plans than employees (nearly 9% of their salary on average compared to about 7% for employees).
� Employers and employees from smaller firms are more likely to contribute more of their salary to their 401(k) plan.
18%
7%
25%
30%
10%
41%
27%
10%
16%
4%
38%
25%
14%
16%
3%
35%
24%
17%
15%
2%
▼
▼
▲
▲
▲
▼
▼
Employers Employees
510141033151511None
7.8%
33
0
0
33
(N=9*)
%
2006
9.2%
38
15
0
23
(N=13*)
%
2007
Owner-only
(N=53)(N=52)(N=38)(N=40)(N=100)(N=105)
2921232521229% to 10%
Percentage of Salary Employers Contribute to 401(k)
Base: Employers with 401(k)
10.2%8.3%9.7%9.0%9.6%8.9%Mean
42254030393111% or more
172387986% to 8%
819151816195% or less
200620072006200720062007
% %
Small Business
%%%%
Micro BusinessTotal Employer
++++
----
----
*Small base size
▲
6.6%
Total Employee (N=421)
6.8%
Micro Business (N=204)
6.3%
Small Business (N=217)
8.3%
Small Business (N=52)
9.0%8.9%Mean
None
Micro Business (N=40)
11% or more
9% to 10%
6% to 8%
5% or less
Total Employer (N=92)
Employers
36
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
%%%Annual Participant Fees
Small BusinessMicro BusinessTotal Employer
%%%Expected Administrative Fees
Small BusinessMicro BusinessTotal Employer
2412
31
11
8
13
9
With 401k
(N=40)
Without 401k
(N=220)
2316
31
18
8
14
2
8
With 401k
(N=52)
Without 401k
(N=49)
Annual Participant and Administration Fees
BASE: OWNERS WHO HAVE 401(k)
PLANQ1220 How much
are the annual participant fees for
each individual 401(k) account in your company’s
401(k) plan?BASE: OWNERS
WHO DON’T HAVE 401(k) PLAN
Q1230 How much do you think the annual
participant fees would be for each individual 401(k) account in your
company’s 401(k) plan?
Q745 How much do you expect the
annual administration fee would be for
offering a 401(k) plan at your company
(this includes your plan’s record
keeping, administration
support, etc…)?
2412
31
11
8
13
9
With 401k
(N=92)
Without 401k
(N=269)
Greater than 2%
1.5% to 2%
1% to 1.49%
Less than 1%
▲
29
20
3
48
Without 401k (N=220)
26
28
8
37
Without 401k (N=49)
Not sure
$5K+
$1K-$4.9K
Less than $1K
<1
29
21
3
48
Without 401k (N=269)
� Employers without 401(k) plans expect annual participant fees to be higher than they really are.
� Nearly half of employers without a 401(k) plan don’t know what to expect in the cost of administration fees.
� About one-third of employers without a 401(k) expect to pay less than $1K in annual administration fees when providing a 401(k) plan (29%).
Employers
Employers
37
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
29 27 2822
29 3126
20
16
8 8
4
209
2832
3
1 2
1
3
1
86
52
64 62
73
48
59
37 42
2007 2006 2007 2006 2007 2006 2007 2006
Not sure
$5K+
$1K-$4.9K
Less than $1K
Trending: Expected Administration Fees
BASE: OWNERS WHO DON’T HAVE 401(k) PLANQ745 How much do you expect the annual administration fee would be for offering a 401(k) plan at your company (this includes your plan’s record keeping, administration support, etc…)? If unsure, please provide best estimate.
Annual Administration Fee for 401(k) Plan
%%%%
Small BusinessMicro BusinessOwner-onlyTotal Employer
Employers
N=414 N=407 N=145 N=142 N=216N=220 N=49N=49
� More employers without a 401(k) plan believe administration fees to be over $1K compared to 2006.
++++
++++
++++
++++
▼
▲
38
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
(N=49)(N=49)(N=216)(N=220)(N=265)(N=269)
(N=16*)(N=15*)(N=122)(N=117)(N=138)(N=132)Reasons to Reconsider
Not sure
Never
Beyond 3 yrs from now
Bet. 1 yr - 3 yrs from now
Bet. 3 mos - 1 yr. from now
In the next 3 months
Increased employee demand
Improved profitability
Higher revenue
Lower cost of plan
Nothing
Other
Automation/Decreased mgmt time
If necessary to be competitive
Tax break incentives
200620072006200720062007
Plan to Offer... % %%%%%
Small BusinessMicro BusinessTotal Employer
30
16
26
27
7
9
7
6
47
2
2
7
6
47
35
4
7
9
47
33
Intent to Provide 401(k) Plans
4
6
16
6
24
43
2
2
7
6
48
35
0
4
7
9
48
32
8
10
9
13
17
42
26
21
20
18
14
11
9
7
55
25
21
20
18
14
11
9
7
55
30
16
26
27
7
9
7
6
47
47
40
13
40
0
7
7
0
47
27
22
22
22
11
27
5
0
34
BASE: OWNERS WHO DON’T HAVE 401(k) PLAN AND HAVE MORE THAN 1 EMPLOYEEQ710 Do you plan to offer a 401(k) plan for your employees…?
BASE: OWNERS WHO PLAN TO OFFER 401(k) PLAN ONLY 3+ YEARS AWAY OR NEVERQ725 Which of the following business events, if any, do you think would lead you to reconsider
offering a 401(k) plan sometime in the near future? Please select all that apply.
<1%
*Small base size
� Approximately 50% of employers who don’t provide 401(k) plans never intend to in the future.
� Tax break incentives, lower plan costs and higher revenues are the reasons most likely to lead employers to reconsider offering a 401(k) plan (26%, 21% and 20% respectively).
++++
▲
▼
Employers
39
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Intent to Provide 401(k) Plans: Never/In Over Three Years
BASE: OWNERS, CEO’S OR PRESIDENTS WHO NEVER PLAN TO OFFER A 401(k) PLANQ715 Why do you plan to never offer a 401(k) plan to your employees? Please select all that apply.
BASE: OWNERS WHO PLAN TO OFFER 401(k) PLAN ONLY 3+ YEARS AWAYQ720 Why do you plan to wait at least 3 years to offer a 401(k) plan to your employees? Please select all that apply.
506762576557Can’t afford to offer co. match
05031333133Can’t afford to offer co. match
(N=8*)(N=3*)(N=19*)(N=14*)(N=27*)(N=17*)
(N=8*)(N=12*)(N=103)(N=103)(N=111)(N=115)
Reasons for Waiting 3+ Yrs
313321232223Other
59811111211Have another plan in place
102511161016Mgmt fees are too high
102523152316Short-term employees
10010191018Too much administration
01731183118Uncertain/unstable business
10823232223Employees not interested
202550504949Not enough employees to make it worthwhile
1233521422Too much administration
2510020351937Employees not interested
253326402340Uncertain/unstable business
005848Other
120228198Have another plan in place
376716131915Short-term employees
253322151915Mgmt fees are too high
253362596258Not enough employees to make it worthwhile
200620072006200720062007
Reasons for Never Offering % %
Small Business
%%%%
Micro BusinessTotal Employer
*Small base size
� “Not enough employees” continues to lead the list as the top reason for not offering a 401(k) plan. This is especially true at micro business firms.
----
Employers
----
40
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Importance of Retirement Plan Features
40
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
41
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
(N=102)(N=101)(N=254)(N=260)(N=151)(N=158)(N=507)(N=519)
8265504653365244Managed Accts/LifeCycle Funds
7160 (N=42)4230 (N=33)3820 (N=10*)4233 (N=85)Auto-enrollment
6347383538393936ETFs
7762555256455650Roth 401(k)
20062007200620072006200720062007
% %
Small Business
%%
Employers
%%%%
Micro BusinessOwner-onlyTotal Employer
Rating Plan Features
BASE: ALL RESPONDENTSQ820 How interested would you personally be in having an option like this within your company’s 401(k) plan?
Q830 How interested would you personally be... in providing this option to you and your company? / be in having this option at your company?Q840 How interested would you be in having a 401(k) offering comprised of ETFs instead of traditional mutual funds at your company?
BASE: AUTO-ENROLLMENT NOT SELECTED AT Q610Q845 How interested would you be in using this feature at your company?
Level of Interest in Retirement Plan FeaturesTop 2 Box % – Very/Somewhat Interested
60 (N=42)
47
65
62
(N=101)
%
Small Business
30 (N=33)
35
46
52
(N=260)
%
Micro Business
36 (N=75)
35
47
52
(N=361)
%
Total Employer
(N=432)(N=715)(N=1147)
636464Managed Accts/LifeCycle Funds
–––Auto-enrollment
494445ETFs
686969Roth 401(k)
Small BusinessMicro BusinessTotal Employee
% %%
� A majority of employers and employees are very/somewhat interested in Roth 401(k)s.
� Although small business employers are most interested in Roth 401(k)s, Managed Accounts/LifeCycle Funds and Exchange-Traded Funds, enthusiasm among this group declined when compared to 2006.
� Interest in Managed Accounts/LifeCycle Funds declined among total employers compared to 2006.
▲
▲
▲
▼
▼
▼
▲
Employers Employees
Level of Interest in Retirement Plan FeaturesTop 2 Box % – Very/Somewhat Interested
*Small base size
----
----
----
----
----
▲
▲
▲
▼
42
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
BASE: EMPLOYERS
Q900 Please select the one attribute that is the most important to you in choosing a 401(k) plan for your company. Q900 Please select another attribute that is the least important to you in choosing a 401(k) plan for your company.
Impact Index (average rating=100)144
127119 117
109105
99
89
7368
50
0
50
100
150
Is easy to
administer
Offers online
access for
employees to
manage their
401(k)
investments
Offers online
access to
administer
your plan
Offers Self-
Directed
Brokerage
Accounts as
an option in
your 401(k)
Offers advice
on
investments
and plan
management
to you
Has an 800
number for
customer
care w here
you can
reach a live
person
Offers an
option for a
Roth 401(k)
Is offered by
a w ell-know n
highly
regarded
brand name
Offers
Managed
Accounts or
LifeCycle
funds
Enables auto-
enrollment into
the 401(k)
plan
Offers
Exchange-
Traded Funds
N=519
� In determining the relative importance of 401(k) plan features, the attribute most important to employers (including owner-only, micro business and small business employers) is “ease of administration”.
� Online access is also very important, with “offers online access for employees to manage their 401(k) investments” and “offers online access to administer plan” ranking as the next top attribute.
� The attribute rated as least important is “offers Exchange-Traded Funds”.
401(k) Plan Attributes: Ratings by Employers
43
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
0.7
0.4
0.1
2.3
0.2
0.6
1.0
0.8
0.1
0.1
0.3
15.0
Offers online access for
employees to manage their investments
1.42.414.70.44.61.81.39.07.63.1Offers online access for employees to manage their investments
10.66.21.035.13.38.611.71.72.04.9Proportion of ‘Most Important’
Offers Self-Directed Brokerage Accounts
Has an 800 number for customer
care
Offers Exchange-Traded Funds
Is easy to administer
Is offered by a well-known
highly regarded
brand name
Offers advice on
investments and plan
management
Offers online access to administer
plan
Enables auto-enrollment
Offers Managed
Accounts or LifeCyclefunds
Offers an option for a Roth 401(k)Total Employers
(N=519)
1.0
0.6
0.1
3.3
0.3
0.8
1.1
0.2
0.2
0.5
2.2
1.3
0.2
7.2
0.7
1.8
2.4
0.3
0.4
1.0
5.3
3.1
0.5
17.8
1.6
4.3
5.9
0.8
1.0
2.5
6.3
3.7
0.6
21.1
2.0
5.1
7.0
1.0
1.2
2.9
0.9
0.5
0.1
3.0
0.3
0.7
1.0
0.1
0.2
0.4
1.2
0.7
0.1
4.1
0.4
1.0
1.4
0.2
0.2
0.6
3.2
1.9
0.3
10.8
1.0
2.6
3.6
0.5
0.6
1.5
0.3
0.2
0.0
1.0
0.1
0.2
0.3
0.0
0.1
0.1
10.3
6.1
1.0
34.4
3.2
8.4
11.4
1.6
1.9
4.8
1.7
1.0
0.2
5.7
0.5
1.4
1.9
0.3
0.3
0.8
Offers Exchange-Traded Funds
Is easy to administer
Is offered by a well-known highly regarded brand name
Offers advice on investments and plan management
Offers online access to administer plan
Enables auto-enrollment
Offers Managed Accounts or LifeCyclefunds
Offers an option for a Roth 401(k)
Offers Self-Directed Brokerage Accounts
Has an 800 number for customer care
BASE: EMPLOYERSQ900 Please select the one attribute that is the most important to you in choosing a 401(k) plan for your company. Q900 Please select another attribute that is the least important to you in choosing a 401(k) plan for your company.
401(k) Plan Attributes: Feature Comparisons� The table measures how likely an employer is to select a feature as “most important” compared to another.
An employer is 3.0 times more likely to select “Is easy to administer” as most important than “Offers online access to administer plan”
44
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
BASE: EMPLOYEES
Q910 Please select the one attribute that is the most important attribute to you in a 401(k) plan.Q910 Please select another attribute that is the least important attribute to you in a 401(k) plan.
Impact Index (average rating=100)
128120 119
105101 100
96 93
75
63
0
50
100
150
Is easy to use Offers advice
on investments
and plan
management to
you
Offers online
access to
manage 401(k)
investments
Offers Self-
Directed
Brokerage
Accounts as an
option in your
401(k)
Offers an
option for a
Roth 401(k)
Is offered by a
w ell-know n
highly regarded
brand name
Has an 800
number for
customer care
w here you can
reach a live
person
Offers
Managed
Accounts or
LifeCycle funds
Enables auto-
enrollment into
the 401(k) plan
Offers
Exchange-
Traded Funds
N=1147
� The attribute rated as most important in a 401(k) plan by employees is “ease of use”.
� The next attributes deemed most important are “offers advice on investments” and “offers online access to manage investments”.
401(k) Plan Attributes: Ratings by Employees
45
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
BASE: EMPLOYEES
Q910 Please select the one attribute that is the most important attribute to you in a 401(k) plan.Q910 Please select another attribute that is the least important attribute to you in a 401(k) plan.
5.84.91.429.16.619.118.41.95.37.5Proportion of ‘Most Important’
0.8
0.7
0.2
3.9
0.9
2.6
2.5
0.3
0.7
1.0
Offers an option for a Roth 401(k)
1.1
0.9
0.3
5.5
1.2
3.6
3.5
0.4
1.0
1.4
Offers Managed
Accounts/LifeCycle funds
3.1
2.6
0.7
15.5
3.5
10.2
9.8
1.0
2.8
4.0
Enables auto-
enrollment
0.3
0.3
0.1
1.6
0.4
1.0
1.0
0.1
0.3
0.4
Offers online access to
manage 401(k) investments
0.3
0.3
0.1
1.5
0.3
1.0
1.0
0.1
0.3
0.4
Offers advice on investments
and plan management
0.9
0.7
0.2
4.4
1.0
2.9
2.8
0.3
0.8
1.1
Is offered by a well-known
highly regarded brand name
0.2
0.2
0.0
1.0
0.2
0.7
0.6
0.1
0.2
0.3
Is easy to use
4.2
3.5
1.0
21.0
4.7
13.7
13.2
1.3
3.8
5.4
Offers Exchange-
Traded Funds
1.2
1.0
0.3
6.0
1.3
3.9
3.8
0.4
1.1
1.5
Has an 800 number for
customer care
5.0Is easy to use
1.1Is offered by a well-known highly regarded brand name
3.3Offers advice on investments and plan management
3.2Offers online access to manage 401(k) investments
0.3Enables auto-enrollment
0.9Offers Managed Accounts or LifeCycle funds
1.3Offers an option for a Roth 401(k)
1.0Offers self-Directed Brokerage Accounts
0.8Has an 800 number for customer care
0.2Offers Exchange-Traded Funds
Offers self-Directed Brokerage AccountsTotal Employees
(N=1,147)
401(k) Plan Attributes: Feature Comparisons� The table measures how likely an employee is to select a feature as “most important” compared to another.
An employer is 1.5 times more likely to select “Is easy to use” as most important than “Offers advice on investments and plan management”
46
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Decision-making for Retirement Plans
46
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
47
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Decision Making for Retirement Benefit Plans
BASE: OWNERS, CEO’S OR PRESIDENTSQ580 Who makes, or would make, the decision for choosing a retirement benefit plan at your company? Select one response.
Q585 What outside sources do you, or would you, rely on to help you choose a retirement benefits plan provider? Select all that apply.
Small BusinessMicro BusinessTotal Employer
(N=101)(N=260)(N=361)Makes the Decision for Choosing a Retirement Benefit Plan
28%14%15%Insurance Broker
36%24%25%Previous experience
23%23%23%Spouse or other family member
50%48%48%Myself
61%55%55%Financial Advisor
9%4%5%Some other manager
5%1%2%An HR Director or Manager
6%5%6%Trusted news source
28%14%15%Employees
Small BusinessMicro BusinessTotal EmployerOutside Sources They Rely on to Help Select a Retirement Benefits Plan Provider
3%7%7%None
10%3%4%A CFO, Finance Director or Treasurer
73%83%83%Myself
35%23%24%Other business owner
27%23%24%Lawyer
5%12%11%None
4%2%2%Something else
54%36%37%CPA
� A majority of employers identify as the decision-makers when choosing a retirement benefit plan at their company (83%).
� Half of all employers rely on financial advisors when choosing a retirement plan (55%).
▲
▲
▲
▲
▲
▲
▲
▲
▼
▼
▼
Employers
48
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Trending: Decision Making for Retirement Benefit Plans
BASE: OWNERS, CEO’S OR PRESIDENTSQ580 Who makes, or would make, the decision for choosing a retirement benefit plan at your company? Select one response.
Q585 What outside sources do you, or would you, rely on to help you choose a retirement benefits plan provider? Select all that apply.
31%28%14%14%8%9%13%13%Insurance Broker
40%36%20%24%15%17%19%22%Previous experience
17%23%19%23%21%24%19%23%Spouse or other family member
45%50%41%48%47%49%43%48%Myself
66%61%43%55%38%35%42%49%Financial Advisor
3%9%3%4%1%1%2%4%Some other manager
2%5%<1%1%0%0%<1%1%An HR Director or Manager
18%6%8%5%8%6%8%6%Trusted news source
31%28%15%14%1%4%12%12%Employees
Small BusinessMicro BusinessOwner-onlyTotal EmployerOutside Sources They Rely on to Help Select a Retirement Benefits Plan Provider
4%3%6%7%6%9%6%8%None
5%10%2%3%0%1%2%3%A CFO, Finance Director or Treasurer
86%73%88%83%93%89%89%85%Myself
35%35%23%23%15%15%21%21%Other business owner
34%27%18%23%10%15%16%21%Lawyer
4%5%14%12%18%18%15%13%None
2%4%4%2%4%4%4%3%Something else
42%54%34%36%21%22%30%32%CPA
20062007200620072006200720062007Makes the Decision for Choosing a Retirement Benefit Plan
(N=519) (N=102)
Small Business
(N=101)(N=254)
Employers
(N=260)(N=151)(N=158)(N=507)
Micro BusinessOwner-onlyTotal Employer
� Employers at smaller firms are most likely to identify as the decision-maker in choosing the company retirement plan, while larger firms are most likely to rely on other executives or managers.
� Employers are more likely to rely on financial advisors in choosing a retirement benefit plan provider compared to 2006 (49% v. 42%).
++++
++++ ++++
----
----
▲
▼
▼
▼
▼
▼
▼
▼ ▲
▲
▲
▲
▲
▼
▼
▼
▲
▲
▲
▲
▲
▲
49
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Gender Differences: Decision Making for Retirement Benefit Plans
BASE: OWNERS, CEO’S OR PRESIDENTSQ580 Who makes, or would make, the decision for choosing a retirement benefit plan at your company? Select one response.
Q585 What outside sources do you, or would you, rely on to help you choose a retirement benefits plan provider? Select all that apply.
FemaleMaleTotal Employer
(N=187)(N=332)(N=519)Makes the Decision for Choosing a Retirement Benefit Plan
10%15%13%Insurance Broker
21%23%22%Previous experience
28%21%23%Spouse or other family member
43%51%48%Myself
44%52%49%Financial Advisor
3%4%4%Some other manager
1%1%1%An HR Director or Manager
5%6%6%Trusted news source
8%14%12%Employees
FemaleMaleTotal EmployerOutside Sources They Rely on to Help Select a Retirement Benefits Plan Provider
12%5%8%None
4%3%3%A CFO, Finance Director or Treasurer
80%88%85%Myself
23%20%21%Other business owner
17%23%21%Lawyer
22%8%13%None
3%3%3%Something else
26%36%32%CPA
� Male employers are more likely to rely on themselves when choosing a retirement benefit plan.
Employers
▲
▲
▼
▼
▼
▲
▲
50
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Likelihood to Recommend a Provider to ColleagueBase: Offer/Have 401(k)
Small Business
MicroBusiness
Total Employee
Small Business
MicroBusiness
TotalEmployer
Small Business
MicroBusiness
Total Employee
Small Business
MicroBusiness
TotalEmployer
Characteristics about 401(k) Provider That Makes Them Likely to Recommend (N=141)(N=123)(N=264)(N=33)(N=21*)(N=54)
9%4%6%16%18%18%Dissatisfied with the service I receive
11%13%12%26%23%23%Feel provider does not care
74%71%72%79%75%76%Offers good investment options
40%39%39%67%65%66%Responsive, professional service
NANANA82%82%82%Easy to administer plan
2%4%3%0%6%5%None of these
(N=76)(N=81)(N=157)(N=19*)(N=19*)(N=38)
Characteristics about 401(k)Provider That Makes Them Not Likely to Recommend
5%10%8%6%0%1%Other
15%29%23%58%41%44%Feel provider cares about my business
69%52%59%82%53%59%Easy for employees to access accts
48%46%47%58%62%61%Low fees / affordable
44%24%32%11%21%20%Other
36%
18%
10%
NA
14%
16%28%37%28%29%None of these
29%22%16%7%8%Not enough investment options
14%11%21%9%11%Difficult to access online/make changes
NANA32%16%18%Difficult to administer
8%11%16%20%19%Too expensive
BASE: OFFER OR HAVE 401(k) PLANQ655 How likely would you be to recommend your 401(k) plan provider to a colleague? Choose any number from 0 to 10.
BASE: THOSE WHO WOULD RECOMMENDQ656 What characteristics about your 401(k) provider make you likely to recommend them to others? Select all that apply.
BASE: THOSE WHO WOULD NOT RECOMMENDQ657 What characteristics about your 401(k) provider make you not likely to recommend them to others? Select all that apply.
(N=217)
(N=204)
(N=421)
(N=52)
(N=40)
(N=92)
Top 3 Box (8-10)
46%
48%
47%
50%
42%
43%
Total Employee
Small Business
Small Business
Micro Business
Micro Business
Total Employer
� Less than half of employers and employees would recommend their 401(k) plan provider.
� The characteristic most important to employers in recommending their 401(k) provider is ease of administration (82%).
� Offering good investment options is also key to employers when recommending their 401(k) provider (76%), as well as the top characteristic among employees when providing recommendations (72%).
Recommending Provider
*Small base size
▲
▼▲
▲
▲ ▲
▼
Employers Employees
Likelihood to Recommend a Provider to ColleagueBase: Offer/Have 401(k)
(N=53)
(N=38)
(N=9*)
(N=100)
(N=52)
(N=40)
(N=13*)
(N=105)
20062007Top 3 Box (8-10)
50%
42%
38%
42%
68%Small Business
45%Micro Business
22%Owner-only
46%Total Employer
▲
51
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Motivators to Switch and Select 401(k) Plan
Small BusinessMicro BusinessTotal Employers
Small BusinessMicro BusinessTotal Employers
(N=52)(N=40)(N=92)
Reasons They Would Consider Switching to Another ProviderBase: Employers with a 401(k) Plan
41%41%41%Quality of investment options/funds within plan
25%9%12%Recommendation from colleague/friend
29%17%20%Recommendation from a financial professional
25%33%31%Better plan features outside of fund offerings
48%34%37%Fund options with a better performance record
(N=49)(N=220)(N=269)
Other than Price, the Most Critical Criteria for Selecting a Provider Would Be...Base: Employers without a 401(k) Plan
23%29%28%Fund options with lower expense ratios
29%26%26%Simpler administration
6%21%20%Other
4%<1%1%Employee education
21%23%23%None of these
12%11%11%Highly recognized/regarded brand name
40%49%47%Lower management fees
2%2%2%Access to customer service representatives
10%7%7%Well-known/highly regarded brand name
37%28%29%Ease of administration/use
BASE: OWNERS WHO HAVE 401(k) PLANQ660 What would make you consider switching to another provider for your 401(k) plan? Please select all that apply.
BASE: OWNERS WHO DON’T HAVE 401(k) PLANQ735 Other than price, what is or would be most critical to you in selecting a 401(k) plan provider?
� The lowering of management fees is the top reason employers would consider switching to another 401(k) provider in 2007 (47%).
� Small business firms are more likely to consider switching to another provider if they were provided fund options with a better performance record or were recommended by a financial professional or a colleague/friend than micro businesses.
� The quality of investment options/funds within a plan is the most critical factor when selecting a 401(k) provider (41%).
▲
▲
▲
▲
▼
▼
▼
▼
Employers
52
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Trending: Motivators to Switch and Select 401(k) Plan
64%41%51%41%48%46%50%43%Quality of investment options/funds within plan
22%25%3%9%11%23%7%14%Recommendation from colleague/friend
47%29%23%17%33%23%29%20%Recommendation from a financial professional
44%25%24%33%11%31%26%31%Better plan features outside of fund offerings
48%48%44%34%44%15%45%33%Fund options with a better performance record
(N=49)(N=49)(N=216)(N=220)(N=142)(N=145)(N=407)(N=414)
38%23%32%29%33%15%33%26%Fund options with lower expense ratios
40%29%46%26%22%23%41%26%Simpler administration
5%6%17%21%26%28%20%23%Other
3%4%2%<1%0%1%1%1%Employee education
Small BusinessMicro BusinessOwner-onlyTotal Employer
Other than Price, the Most Critical Criteria for Selecting a Provider Would Be...Base: Employers without a 401(k) Plan
9%21%35%23%44%54%31%29%None of these
39%12%8%11%11%15%14%12%Highly recognized/regarded brand name
49%40%37%49%22%23%37%43%Lower management fees
2%2%2%2%1%3%2%3%Access to customer service representatives
9%10%7%7%6%6%7%7%Well-known/highly regarded brand name
17%37%22%28%18%16%21%24%Ease of administration/use
20062007200620072006200720062007Reasons They Would Consider Switching to Another ProviderBase: Employers with a 401(k) Plan (N=105) (N=53)
Small Business
(N=52)(N=38)(N=40)(N=9*)(N=13*)(N=100)
Micro BusinessOwner-onlyTotal Employer
BASE: OWNERS, CEO’S OR PRESIDENTS WHO HAVE 401(k) PLANQ660 What would make you consider switching to another provider for your 401(k) plan? Please select all that apply.
BASE: OWNERS, CEO’S OR PRESIDENTS WHO DON’T HAVE 401(k) PLANQ735 Other than price, what is or would be most critical to you in selecting a 401(k) plan provider?
� Fund options with a better performance record and simpler administration were the top reasons to consider switching a 401(k) plan provider in 2006, while in 2007 lower management fees topped the list.
� Although the quality of investment options and funds within a plan remains the most critical criteria when selecting a provider it has declined compared to 2006 (43% v. 50%).
� Owner-only firms are least likely to report ease of administration/use as a critical criteria for selecting a 401(k) provider.
----
*Small base size
▼ ▲
▲
▲
▼
▼
▲
▲
▲
Employers
----
----
----
---- ----
++++
53
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Employee Retention
53
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
54
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Small BusinessMicro BusinessTotal EmployersBenefits that Employers Feel May Prevent Their Employees from Leaving the CompanyBase: Owners
(N=101)(N=260)(N=361)
None of the above
401k
More vacation
Healthcare
More flextime 27
26
20
16
51
Employees Who Would Leave Current Job for One that Provided a 401(k) PlanBase: Employees without 401(k)
Small Business (N=171)
Micro Business (N=444)
Total Employees (N=615)
BASE: OWNERSQ1215 Which of the following benefits do you think would prevent employees from leaving your company? Select
all that apply.
BASE: EMPLOYEES WHO DON’T HAVE 401(k) PLANQ729 All things equal, would you leave your current job for an employment opportunity that provided a 401(k) plan?
28
28
20
17
51
25
8
19
7
58
▼
39
40
31
� Ultimately, most employers believe that their employees could not be retained with any form of benefit (51%).
� Nearly 4-in-10 employees would leave their current job for one that provided a 401(k) plan.
Importance of 401(k) in Retaining Talent
▼
Employers
55
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Cost of Replacing Employees
BASE: OWNERSQ1200 Approximately how much does it cost to replace an employee at your company?
Q1205 Considering the cost of replacing an employee, how is the cost mainly incurred by your company? Please select all that apply.Q1210 What do you fear the most when you lose an employee?
$6.9K$5.7K$5.8KMean
23%20%20%General disruption at work – gossip, lost productivity, hiring new person
21%22%22%Build up of work until a replacement is hired
34%25%26%Processes or knowledge that are lost and will be painful to rebuild
57%44%45%Lost revenue and productivity during the time of re-hire
16%11%11%Customers who leave because of valued employee’s departure
82%66%67%Time to get the new person up-to-speed vs. driving my business
22%33%33%Not sure
Biggest Fear When Losing an Employee
6%3%3%The chance that other employees might leave
14%3%4%Cost of hiring a head hunter to hire a new candidate
Cost of Replacing an Employee Mainly Incurred by...
8%8%8%$20,000 or more
12%4%4%$10,000-$19,999
7%8%8%$5,000-$9,999
25%19%19%$1,000 to $4,999
27%28%28%Less than $1,000
12%22%22%Other
5%7%7%The potential of losing an important customer(s)
11%25%24%Other
(N=101)(N=260)(N=361)Approximate Cost to Replace an EmployeeSmall BusinessMicro BusinessTotal Employer
� Employers report that it costs approximately $6,000 to replace an employee.
� The cost when replacing an employee is mainly incurred in the time to get new hires up-to-speed (67%).
� The biggest fear when losing an employee is the loss of processes and knowledge, even more so for small business employers than for micro business employers (34% v. 25%).
▼
▼
▼
▲
▲
▲
▲
▲
Employers
56
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
401(k) Plans and Tax Implications
56
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
57
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Retirement Investments and Tax Savings
BASE: OWNERS, CEO’S OR PRESIDENTSQ1300 Some individuals use 401(k)s, IRAs, and other retirement investment products as tax shelters
for their current income. Are you using these strategies or similar ones to protect your current income?
BASE: THOSE WHO RESPONDED YESQ1305 How much do you estimate this saved you personally (or household) from paying taxes in the last tax year?
Q1310 How did you become aware of the savings you can achieve through these types of accounts? Select all that apply.
Use Tax Shelters to Protect Current Income
% Yes
29%24%9%20%My broker (online or personal)
42%39%36%39%CPA / book keeper
62%55%49%53%Financial Advisor
19%10%11%11%Business colleague
13%21%15%19%Friend or family member
13%29%26%27%Media (newspaper, TV, mag., other)
Small Business
MicroBusiness
Owner-only
TotalEmployerMade Aware by...
8%12%6%10%$20,000 or more
8%5%4%5%$10,000-$19,999
33%19%15%18%$5,000-$9,999
13%36%32%33%$1,000 to $4,999
10%13%19%14%Less than $1,000
12%19%17%18%Other
0%2%4%3%Unaware of savings by these accts.
29%16%23%19%Not sure
(N=52)(N=91)(N=47)(N=190)Estimated Savings
Small Business
MicroBusiness
Owner-only
TotalEmployer
33%
30%
34%
51%
Total Employer
Owner-only
Micro Business
Small Business
N=519
N=158
N=260
N=101
� Larger firms are more likely to use retirement investment products as tax shelters (51% of small business v. 34% of micro business and 30% of owner-only firms).
� Larger firms also report more tax savings. Nearly half of small business owners report saving more than $5K in tax payment last year, while only about 35% of micro business and 25% of owner-only employers report savings of over $5K.
� Most employers were made aware of tax savings by their financial advisor or CPA/book keeper (53% and 39% respectively).
▲
▲
▲
▲
▲
▼
▼
▼
58
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
(N=36)
(N=136)
(N=81)
(N=253)
14%86%Small Business
21%79%Micro Business
16%84%Owner-only
19%81%Total Employer
%%
Top 2 Box(Moderately/Great extent)
Bottom 2 Box(Somewhat/Not at all)
Cost of Lacking Tax Advantaged Retirement Investments
BASE: OWNERS, CEO’S OR PRESIDENTSQ1300 Some individuals use 401(k)s, IRAs, and other retirement investment products as tax shelters
for their current income. Are you using these strategies or similar ones to protect your current income?
BASE: THOSE WHO RESPONDED NO TO Q1300Q1315 To what extent do you think you paid more than you should have in taxes because you did not have a 401(k), IRA or other tax advantaged account?
BASE: OWNERS, CEO’S OR PRESIDENTS WHO THINK THEY PAID TOO MUCH Q1320 How much do you think you paid in taxes last year that you could have saved?
Q1325 Given how much you could have saved, are you considering starting a tax advantaged account this year?
BASE: THOSE WHO RESPONDED NO TO Q1325Q1330 Why are you not considering starting a tax advantaged account this year? Select all that apply.
25%11%13%12%Too busy
0%16%13%15%Not comfortable/experienced in investing in stocks or bonds
50%38%25%35%Find it difficult to put money aside to fund an IRA / 401(k)
0%11%13%11%Happy paying what I pay in taxes
25%35%38%35%Not enough money to be saved to justify time/cost to set-up
0%18%23%19%Less than $1,000
40%37%31%35%$1,000 to $4,999
20%11%23%14%$5,000-$9,999
20%7%0%6%$10,000-$19,999
(N=4*)(N=17*)(N=8*)(N=29*)Reasons for Not Considering to Start One
80%58%62%59%No
20%42%38%41%Yes
(5*)(N=28*)(N=13*)(N=46)Will Consider Starting a Tax Advantaged Account
0%3%0%2%$20,000 or more
0%37%38%36%Other
20%24%23%24%Not sure
(N=5*)(N=28*)(N=13*)(N=46)Amount in Taxes Could Have Saved
Small Business
MicroBusiness
Owner-only
TotalEmployer
(N=101)
(N=260)
(N=158)
(N=519)
36%51%Small Business
52%34%Micro Business
51%30%Owner-only
51%33%Total Employer
%%NoYes
Use Tax Shelters to Protect Current Income
Extent They Think They Paid More
� Among employers who are not using retirement investments as tax shelters for current income, a majority do not believe they paid more in taxes (81%).
� Most employers who believe they paid too much in taxes feel they could only save under $5K in tax payments.
� The top issues preventing employers from starting tax advantaged retirement accounts relate to monetary needs: “not enough money to be saved to justify time/cost” and “find it difficult to put money aside to fund an IRA/401(k)” (35% for both).
*Small base size
▼▲
59
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Social Responsibility and Political Considerations in the Workplace
59
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
60
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
85%
81%
86%
90%
84%
83%
88%
Total Employer (N=519)
Owner-only (N=158)
Micro Business (N=260)
Small Business (N=101)
Total Employee
(N=1147)
Micro Business (N=715)
Small Business (N=432)
Feel It Is Important to Run/Work at Socially Responsible Company
Top 2 Box % – Very/Somewhat Important
Social Responsibility in the Workplace
BASE: ALL RESPONDENTS Q572 How important is it for you to run/work at a socially responsible company?
Q573 Do you think the following are socially responsible programs?
Think the Following Are Socially Responsible Programs
(N=432)(N=715)(N=1147)(N=101)(N=260)(N=158)(N=519)
85%79%80%68%52%60%56%Providing employee 401(k) program
95%87%89%88%72%71%72%Providing employee health benefits
82%86%85%76%84%80%82%Using local products and resources when possible
EmployeesEmployers
57%
81%
%
MicroBusiness
63%59%56%45%41%44%Aligning with a charitable partner
87%82%70%80%82%81%Environmentally friendly programs
%%%%%%
Small Business
Total Employee
Small Business
MicroBusiness
Owner-only
TotalEmployer
� Employees view benefits as socially responsible programs more often than do employers.
� Employers feel the use of local products and resources is most socially responsible (82%).
� Employers and employees of small businesses are more likely to feel it is very/somewhat important to work at a socially responsible company.
▲
▲
▲ ▲
▲ ▲
▼
▼
▼
▼
▼
61
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Political Considerations
BASE: ALL RESPONDENTS Q579 Do you expect Social Security to be around when you retire?
BASE: OWNERS, CEO’S OR PRESIDENTSQ577 What are the key issues you want the politicians to address during the upcoming Presidential campaign? Select all that apply.
Expect Social Security to Be Around When They Retire
Key Issues They Want Politicians to Address During the Upcoming Presidential CampaignBase: Owners, CEO’s Or Presidents
(N=101)(N=260)(N=158)(N=519)
62636162Energy costs
81757174Healthcare
29262325Housing costs
Employers
21262726Other
41474546The environment
71676466Social Security
%%%%
Small Business
MicroBusiness
Owner-only
TotalEmployer
4555Total Employee (N=1147)
3268Small Business (N=101)
3862Small Business (N=432)
4753Micro Business (N=715)
2872Micro Business (N=260)
3268Owner-only (N=158)
3070Total Employer (N=519)
%%
NoYes
� Nearly 1/2 of employees and 1/3 of employers expect social security to not be around when they retire.
� Small business employees are more likely than micro business employees to believe social security will be around (62% v. 53% respectively).
� Healthcare is the top issue that employers want addressed in the upcoming Presidential campaign (74%). As company size increases, this is even more apparent (81% for small business employers).
▲ ▼
▲ ▼
62
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Respondent Profile
62
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
63
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Respondent Profile: Personal Demographics
5
1
2
<1
2
2
86
%
23
35
23
19
%
28
57
14
%
37
63
%
Employers (2006)
22Decline to answer
<12Other
<11Native American
21Asian
71African American/Black
122Hispanic
7589Caucasian/White
%%Ethnicity
2425West
3333South
2321Midwest
2021East
%%Region
723Matures
4556Boomers
4721Gen Y/X
%%Age
3837Female
6263Male
%%Gender
EmployeesEmployers (2007)
NA
NA
NA
NA
%
NA
NA
NA
%
NA
NA
NA
NA
NA
NA
NA
%
Employers (2006)
413$150,000 or more
1617$100,000 to $149,999
3531$50,000 to $99,999
3319Less than $49,999
%%Total HH Income Before Taxes
1339Attended grad school/Grad school degree
5155Attended college/College degree
375High school or less
%%Education
−1Homemaker
−<1Student
−3Retired
−<1Not employed, but looking for work
−68Self-employed
−2Employed part time
10026Employed full time
%%Employment Status
EmployeesEmployers (2007)
64
©2007, Harris Interactive Inc.
H A R R I S I N T E R A C T I V E
Respondent Profile: Employment Demographics
−1816$500K+
−2421Decline to Answer
NA
NA
NA
NA
%
23
39
%
48
52
%
5
64
31
%
−
−
−
−
7
4
90
%
Employers (2006)
5246Other
2829Professional Services
1313Construction/Manufacturing
712Accommodation/Food Services/Retail
−24$100K less than $500K
−32Less than $100K
%%Organizational Revenue
−53Has part-time
%%Industry
−47Full-time only
%%Business Employment Status
234Small Business (26-50)
7763Micro Business (2-25)
−33Owner-only
%%Company Size
80−Other position
14−Other senior executive
5−Vice President
2−CFO/Controller
−11President
−5CEO/Chairman
−84Owner/Partner
%%Job Title/Position
EmployeesEmployers (2007)