Despite the federal government shutdown, the House Small Business Committee held a hearing recently to discuss the challenge of retirement savings for small employers.  One witness, Ray Rucksdashel, CFO of Quest-Tec Solutions (QTS) of Houston, testified about his experience as a client of a Professional Employer Organization (PEO).  Highlights of his testimony included the following:

  • Relief of the administration burden associated with a 401(k) plan
  • Minimizing personal risk as a plan administrator
  • Ability to offer employee benefits to allow him to compete with larger companies

On October 2, The National Association of Professional Employer Organizations (NAPEO) issued a press release that also cited a recent comprehensive study by McBassi and Company which reported on the experiences of small businesses who partner with PEOs.

With respect to retirement plans, the following facts were included in their report:

  • PEOs provide retirement plans to many small businesses that would otherwise not sponsor them
  • Employees of PEO partnered companies participate at much higher rates
  • 98% of PEOs offer some type of retirement plans for the clients
  • In 2011, only 16% of all employees of the smallest companies (fewer than 10 employees) offered plans
  • Those employing 10-49 employees participated at a 30% rate

There is mounting evidence that partnering with a PEO reaps many benefits for small businesses.  A safer and more effective method to manage retirement plans is one of them.  And now, Congress has been delivered the message.