The Colorado nonprofit organizations and small business leaders we represent tell us they’re concerned about their employees’ ability to retire securely — and they have good reason to be.
About 80 percent of Coloradans working in small businesses have no workplace retirement plans, according to the Bell Policy Center. Colorado Nonprofit Association’s 2014 salary survey found that 53 percent of nonprofit organizations responding either do not offer a retirement plan or do not contribute to the plans they do offer.
More small business owners and nonprofit leaders would like to offer retirement plans because they know these plans help create a happier and more productive workforce. But the barriers to setting up these plans are significant, including lack of administrative capacity and high front-end costs.
That’s why both Small Business Majority and Colorado Nonprofit Association have endorsed House Bill 1235, the Colorado Retirement Security Task Force bill, as a step toward solving the retirement crisis our workers face.
The Retirement Security Task Force would do two things:
• It would examine how well Coloradans are prepared financially for retirement and identify the factors that make it difficult for more of them to save. This would include studying the barriers employers face in offering workplace retirement plans.
• It would study the feasibility of creating savings plans for private sector-workers to make it easier for more employers to offer plans. For example, employees might contribute a small part of their earnings to be held in trust and managed by a professional investment firm. Workers would get their contributions plus a return on their investment when they retire. These plans would be portable between jobs in Colorado. Employers could but would not have to contribute to them — all they would have to do is pass the deducted earnings on to the investment fund.
Saving through a workplace retirement plan is the easiest and best way for most workers to save, but nonprofits and small businesses need help offering these plans. The Colorado General Assembly must recognize that the work of the task force is critical to supporting the state’s small businesses and nonprofits.
Small businesses are the backbone of Colorado’s economy. About one-third of all Colorado workers are employed in businesses with fewer than 50 people, according to the Colorado Department of Labor and Employment. The nonprofit sector is also a major employer in Colorado. Our state’s 20,000 nonprofits employ more than 146,000 employees and pay $6.7 billion in wages, according to the Bureau of Labor Statistics.
As leaders in our industries, we share the goal of making sure our workers are economically self-sufficient in retirement. Passing the Retirement Security Task Force bill should be a top priority for the Legislature. Taking action on this issue now would help our state’s workers have secure futures and help small businesses and nonprofits keep the talented workforce we need.
Denver-based Tim Gaudette directs Small Business Majority’s outreach and development efforts in Colorado, Nevada and other Western states. Mark Turner is Director of Public Policy at Colorado Nonprofit Association.
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