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Collins: Small Businesses Need Help With Retirement Plans

Tom Porter

WASHINGTON - Census figures show that Maine has the oldest population in the nation. Now, the state's small business owners are taking a close look at a proposal, introduced recently by Maine Sen. Susan Collins, that's designed to encourage more small employers to offer retirement plans to their workers.

Talking on the Senate floor last month, Collins said her work with the Special Committee on Aging had brought some worrying facts to light. "Far too many American seniors have real reason to fear that they will outlive their savings," Collins said.

Collins says one in four retired Americans has no source of income beyond Social Security. In Maine, it's one in three. She also cites a Gallup survey published in 2012 which found that nearly six in 10 Americans are worried they will not be able to maintain their standard of living in retirement.

Such concerns led Collins, a Republican, to join with Democratic Sen. Bill Nelson, of Florida, to introduce the Retirement Security Act of 2015, "that would encourage more small employers to offer retirement plans that would provide incentives for employees to save more for retirement."

For Cathy L'Heureux, these were welcome words. L'Heureux is head of accounting at Apothecary By Design, where she's been working since 2012. "This bill that is being proposed would help us greatly," she says.

To be sure, workers at the Portland-based pharmacy already have a pretty good set-up when it comes to retirement security. The company has just launched a profit-sharing scheme for qualifying employees. In addition, workers get 3 percent of their income automatically put into a 401K, whether or not they choose to contribute.

But, says L'Heureux, it's impossible to be over-prepared for retirement. "In today's world, Social Security is not necessarily something we can rely on. We're not sure what's going to be available for us there in the future," she says. "The more that we can do through our employers, and the more the employers can do for us will greatly affect quality of life at retirement time and after."

Apothecary By Design has enjoyed fast growth since it was launched seven years ago. Founding principal Mark McAuliffe says, in that time, the company has gone from 12 employees to 70,

"We employ people all the way from high school graduates, to pharmacy Ph.D.'s," McAuliffe says, "and so a wide range of people, all of whom have to retire, all of whom have to worry about having money for retirement."

Current law allows businesses to match up to 6 percent of employee contributions, while employees can pay up to 10 percent of their earnings into a 401K. This proposed legislation would enable employers to match contributions of up 10 percent. Employees would also be able contribute more than 10 percent - albeit without an additional employer match.

The bill contains a provision to help smaller businesses - those with fewer than 100 employees - offset the cost of this additional match through a new tax credit. McAuliffe says Apothecary By Design will definitely be taking a close look at the bill, should it become law.

"Providing more options for employees and employers - for employees the option is to save more under the plan, and for employers is to contribute more - that is a big plus," he says.

The bill also aims to make it simpler and cheaper for smaller businesses to join a so-called "multi-employer plan." Maine State Chamber of Commerce President Dana Connors says this would enable them to achieve economies of scale when putting together employee retirement packages.

"It does make it easier for small businesses to come together in a group plan to be able to have a stronger presence in the market," Connors says.

In his 2015 State of the Union address, President Barack Obama made retirement security a priority for his administration - motivated perhaps by the fact that, according to an international survey, the U.S. ranks 19th in the world for retirement security, behind the Czech Republic and just ahead of Slovenia.
Read the joint statement by Sens. Susan Collins and Bill Nelson.