Three-quarters of small business owners believe that so many Americans are financially unprepared for retirement that the problem has reached the level of a crisis, but only about a fifth of them actually offer their employees a 401(k) or similar plan, according to a new survey.

The survey of 501 small business owners, by Harris Interactive, conducted on behalf of Nationwide Financial, found that only 19% of the small business owners surveyed offer their employees a 401(k) plan or some other type of employee self-funded retirement plan.

Few small businesses provide their employees access to an employer-sponsored 401(k) plan because many of them first need to reach a point of business maturity or critical mass before they can absorb the cost and administration of a 401(k) retirement plan.

Only 11% of the small business owners surveyed said they are likely to add an employee-sponsored 401(k) plan within the next two years. Sixty-nine percent said their business was too small and more than half said such a plan would be too expensive.

Nevertheless, small business owners indicated they would like to offer a retirement plan, and their employees certainly want one too. Thirty-seven percent of the small business owners with more than six employees who responded to the survey said they are under pressure from employees to offer a retirement plan. Four in five (78%) of the owners surveyed said that having a retirement plan was also effective in helping them attract qualified employees.

Nationwide is backing legislation that has been introduced in Congress, known as the SAVE Act, which encourages small businesses to pool together to offer Multiple Small Employer Plans, or MSEPs, which are less expensive than single-employer plans and simplify an employer’s administrative requirements. The legislation, also known as H.B. 4742, is sponsored by Rep. Ron Kind, D-Wis., and David Reichert, R-Wash. It would allow small employers to reduce their costs by pooling their resources under a single plan with easier administrative requirements.

“Our survey found that nearly half (46%) of small business owners were not aware or were unsure that an employee self-funded retirement plan could be offered without having to match employee contributions,” said Anne Arvia, senior vice president of retirement plans for Nationwide Financial, in a statement. “The provisions in the Small Businesses Add Value for Employees (SAVE) Act before Congress will remove many of the barriers that have kept small businesses from offering their employees a retirement plan.”

According to the survey, 71% of the small business owners said that when selecting an employee self-funded retirement savings plan, it was important that the plan have the flexibility to match or not match employee contributions, while 62% said it was important that multiple employers would group together to pool resources and reduce administration costs.

Four in five owners said that when selecting a plan, it was important for the plan to have a minimal amount of administration requirements so that it could be offered at a low price. Three in four owners said it was important, as their business grew, for the plan to be able to be converted to better meet their needs.

-- This article first appeared on Accounting Today.