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Whether they are working for a small or large business, a nonprofit, or as sole proprietors, every American deserves to retire with security and peace of mind. Unfortunately, far too many Americans are facing a crisis: the inability to fully retire with dignity after a life of hard work. 

Many of today’s workers are nowhere close to having enough saved away to ensure a quality, secure retirement. In fact, half of all-American families near retirement have $12,000 or less in retirement savings and one third have less than $5,000 saved for retirement. 

What’s more, among non-retirees in their 50s and 60s, one in eight lacks any retirement savings and less than half think their retirement savings are on track, according to the latest Report on the Economic Well-Being of U.S. Households.  Even among young workers saving for retirement remains a struggle or even an afterthought. The high cost of an education has made retirement readiness more difficult and for some, impossible. 

Given that there are nearly 30 million small businesses supporting 56 million jobs, it is imperative that small firms have the tools and resources to set up retirement plans so business owners and their workers have financial security. However, when over half of all small businesses do not have a retirement plan set up, we know that more work needs to be done. One of the barriers for small firms is the cost of setting up a plan along with the costs of administering and maintaining the plan. 

Small firms then face the ongoing fiduciary duties, such as reviewing investments and running discrimination tests – all while trying to run a business.  Needless to say, the process can become burdensome and costly rather quickly.  And if a small employer faces too many challenges, they may ultimately feel that the burdens of providing a retirement plan may, unfortunately outweigh the benefits. 

Understanding these challenges can help us better address the solutions to low participation rates among small entities. One approach may be to offer increased tax incentives to small business owners who choose to sponsor a plan. 

Another way to increase plan participation is to allow small firms to band together to offer retirement plans which could lead to administration savings and reduced fiduciary liability. And making it easier for employees to automatically enroll in a retirement plan could encourage employees in a small business to save for their retirement. 

These and other ideas merit further discussion.  But what is absolutely clear—we must act soon to help small businesses, their employees, and entrepreneurs plan for their future. For this reason, we need to make sure that retirement plans are attractive for small businesses as their retirement saving is integral to our nation’s future.  

And that is why we are here to today.  The hearing will examine the options for small employers, the benefits and barriers they face in offering plans, and options for expanding coverage. It will allow us the opportunity to discuss the current vehicles that many small businesses use to provide retirement benefits and ways in which they can be improved upon.

With the proper tools, America’s small firms can help to create financial security for themselves and their workers. 

With that, I thank each of the witnesses for joining us today and I look forward to your testimony.