Americans are woefully underprepared for retirement. So it’s no surprise that employer-sponsored retirement programs are a high priority for all workers.

Fifty-five-year olds in the U.S. currently have median retirement savings of less than $50,000, and two-thirds fear they will outlive their savings, a Prudential report recently revealed.

However, only around one-third of small employers offer retirement savings plans, according to Fidelity Investment’s 2023 Small Business Retirement Index, which cited time and cost as the biggest barriers small-business owners face in offering retirement benefits. First, employers must pay the initial plan setup cost, which can range from $500 to $2,000. Then, they have to shell out $750 to $3,000 annually for administration fees for tasks such as Form 5500 completion and annual nondiscrimination testing. Beyond that, there’s usually a fee of $15 to $60 per person, according to Complete Payroll Solutions.

Remark Glass is a Philadelphia-based glassware company with a nonprofit recycling division called Bottle Underground. Its co-founder, Danielle Ruttenberg, struggled to find affordable benefit plans for her nearly 25 employees, especially for health care.

“We’re under 50 employees, and there are not a lot of affordable plans,” she said.

But Ruttenberg still wanted to find a way to show her employees she cared about investing in their well-being and future. She found a solution in an unlikely place: her small-business association.

One Small Business Network’s Solution

The Sustainable Business Network of Greater Philadelphia, of which Ruttenberg is a member, recently got creative to help its members provide coveted retirement options.

In 2021, SBN partnered with a local financial institution — Philadelphia-based, woman-owned Entrust Financial — to provide a type of 401(k) plan called a Multiple Employer Plan to the 131 organizations in their membership.

Devi Ramkissoon, executive director of SBN, says the program includes a comprehensive menu of sustainable investment options and is designed to do some of the heavy lifting for small and medium-size businesses.

“Any member of ours can opt into the 401(k) program, so they avoid a lot of the initial homework — and ideally avoid some of the extra costs that are associated with plan setup,” she says.

There’s a tiered annual membership fee for SBN, which ranges from $100 to $350. But SBN was able to negotiate discounts for their members on other administrative fees, like a 50 percent discount on companies’ average initial installation fee and a discount every year on record keeping costs. Entrust is SBN’s plan manager and receives payment from workers or employers in exchange for their financial advising services, according to Jennifer Bravo, a principal at Entrust.

SBN’s 401(k) plan gave Ruttenberg a way to offer competitive benefits to employees without breaking the bank. Remark covers their employees’ enrollment costs and offers matching contributions. If an employee contributes up to 3 percent of their paycheck, the Remark matches that full amount. For contributions between 3 percent and 5 percent of an employee’s paycheck, they match half of that amount.

“I think it made everyone feel really good that they had something to look forward to,” Ruttenberg says. “And that we were contributing to their future as well.”

Changing Investment Landscapes

For Remark and Bottle Underground, SBN’s 401(k) plan offered more than just affordability. Entrust specializes in advising small-business owners and impact investing, meaning they help investors select mutual funds and companies that meet a higher-than-average standard of ESG (environmental, social, and governance) practices.

“Trusting that the impact of the money that we’re putting into that plan is supporting other businesses that have alignment with our goals was important to [our team],” Ruttenberg says.