Amid a retirement 'crisis', employers are still unsure how SECURE 2.0 can help

SECURE 2.0 was intended to make retirement a top priority for organizations and their workers. But it seems like many of those benefits are getting lost in translation. 

According to UBS, less than half of employers are familiar with which provisions in the retirement legislation are mandatory and which are optional. Twenty-six percent of employers would like to implement SECURE 2.0 provisions into their retirement plans and are actively looking for support to do so, while 7% have no plan in place and do not know where to start. 

"This is the largest retirement legislation that there has ever been and it has more than 90 provisions in it," says Mike Griffin, head of distribution and institutional client engagement for workplace wealth solutions at UBS. "I don't think it was shocking to find that employers need help with this." 

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UBS found that employers overall lacked familiarity with various implications of these provisions. For example, 52% did not understand the timeline of when certain provisions would go into effect, and nearly half did not know about available tax credits that could offset administrative costs for implementing these provisions. 

Particularly for small businesses, this is critical knowledge: SECURE 2.0 offers a "starter" 401(k) or 403(b) plan, which employees are automatically enrolled into. Employer contributions are capped at $6,000 per year, compared to the 2024 limit of $23,000 for traditional 401(k) or 403(b) accounts. Three available tax credits can make implementation of these plans low-to-no-cost for businesses. 

"Half of America doesn't have a retirement plan, and half are small employers," Griffin says. "That's exactly why SECURE 2.0 was put in place. Not only that, it's exactly why the tax credits were put in place. We have to have people saving for retirement." 

Read more: How small businesses can help employees prepare for retirement 

Today, 67% of Americans are saving for retirement, yet only 34% feel they're on track to save enough. They're right to be concerned: The median retirement saving account balance is $87,000, according to the Federal Reserve. It's recommended that people save eight to 10 times their salary by age 67.  

Additionally, student loan and other consumer debt, an overall lack of emergency savings and other financial obligations are a hindrance to building a financially stable future. And while employers are aware their employees need help, and are interested in using SECURE 2.0 to provide employees with those tools, they need more guidance from advisers and their plan sponsors to put these provisions into place, Griffin says.  

"It's a wake up call to financial advisers and [plan sponsors] that people need help, and they're looking for this," Griffin says. "We need to really be proactive in helping clients and business owners with this. Ask the simple question: Do you know about SECURE 2.0? And then promote it." 

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UBS data found that 80% of employers are highly interested in getting guidance and information about these provisions, though just 50% are turning to their current plan sponsor to help them. This is an opportunity for plan sponsors and employers to change how people engage with their retirement plans, with the end goal being a more secure financial future for all. 

"We get to help people retire — we get to help people become financially free," Griffin says. "As a country, we have an obligation to help close this coverage gap and give everybody the ability to save for retirement."