|By Carrie Wells, The Baltimore Sun|
|McClatchy-Tribune Information Services|
The EZ-IRA is designed to overcome hurdles that limited small-business access to such retirement investment vehicles, leaving many workers unprepared for retirement. Small-business owners often balk at the expense and liability of offering their employees a retirement plan, and rarely do employees without an employer-sponsored plan sign up for one on their own.
Meanwhile, few financial firms offer plans for small businesses because they tend to be expensive to manage.
"You're overcoming participant apathy," said
Officials with the three firms said payroll deduction was key to employee participation.
About 89 percent of employees who don't have access to a retirement plan at their jobs have saved less than
"There's no doubt there would be a need for it," said
The EZ-IRA will cost
Such a product is unusual because it's a technological hassle to pull in retirement data and records from a multitude of small companies that may have different styles and methods of record-keeping, said officials of the partner companies.
"From the adviser's side, it was always too complicated," said
But for the EZ-IRA, the firms will offer it through payroll companies that already keep that data. Cennairus, which offers workers compensation policies, can link electronically to more than 4,500 payroll companies, giving the partners potential access to 13 million employees.
"The economy of scale is such that the financial industry goes after the higher-paid employees at large companies," Rosapepe said. "The working class employees at smaller companies — they don't think it worth their time."
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