Response to DOL’s RFI on Expanding MEPs to Financial Institutions
Summary
SIFMA provided comments to the Department of Labor on the expansion of retirement plan options. DOL is seeking comments on whether to amend its regulations to facilitate the sponsorship of open multiple employer plans by persons acting indirectly in the interests of unrelated employers whose employees would receive benefits under such arrangement.
SIFMA is encouraged by this Request for Information from the Department to take a broader look at the options for expanding access to retirement plans, particularly through the expansion of the availability of multiple employer plans. The Department has the ability to interpret expansively what is deemed to be “indirectly in the interest of the employer” to include pooled employer plans where the employers are unaffiliated and are not linked by either industry or geography. In SIFMA’s view, to be any more limiting would undermine efforts to expand retirement savings programs to the workers that do not currently have access to an employer-based plan.
Excerpt
Employee Benefit Security Administration
U.S. Department of Labor
200 Constitution Ave., NW
Washington, DC 20210
Re: RIN 1210-AB92, “Open MEPs” RFI|
Ladies and Gentlemen:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to respond to the Department of Labor’s request for information with regard to the expansion of retirement plan options. The Department is seeking comments on whether to amend its regulations to facilitate the sponsorship of open multiple employer plans (“MEPs”) by persons acting indirectly in the interests of unrelated employers whose employees would receive benefits under such arrangements (called “open MEPs”). We strongly support the Department moving forward with such an amendment.
The Importance of Addressing Retirement Savings
SIFMA shares the Department’s concern that American workers are not saving enough for retirement. We strongly believe individuals need to save more and make more educated choices with respect to their retirement savings. That goal requires a steady focus on education and disclosure, and greater partnership between employers, providers and employees. Financial literacy and general investment education need to become a part of the basic curriculum from grammar school through high school, including educating individuals about their likely retirement income needs, accessible methods of estimating those needs and the amount necessary to set aside monthly to meet those needs.
Participating in an employer-sponsored retirement plan is often the easiest and most convenient way for workers to save. Expanding the availability of these plans is critical to ensuring that more Americans are adequately preparing for their retirement. According to the U.S. Bureau of Labor Statistics National Compensation Survey, 79% of all full-time workers participate in an employer-sponsored defined contribution or defined benefit plan when a plan was available.2 Furthermore, according to an Investment Company Institute (“ICI”) survey, nearly 5 out of ten individuals participating in a defined contribution plan at work indicated that they “probably would not be saving for retirement” if they did not have access to an employer-sponsored plan.3 Many employers offer automatic enrollment, tax-deferred payroll deductions and matching contributions, all of which encourage employees to build their retirement nest eggs. There is no question that employers recognize that offering a plan helps attract and retain talent. Small businesses universally list having a retirement plan as second in importance only to offering health insurance.4 However, too many businesses—and in particular, small businesses—face significant barriers to establishing and maintaining retirement plans for their employees, and fewer than 50% of workers at an employer with under 50 employees have access to a plan at work. Compared with 88% of workers at an employer with more than 500 employees with access to an employer-sponsored plan, there is a significant access gap among smaller employers. Employers often cite the costs of setting up a plan, the confusing regulatory landscape, and the very real legal risks inherent in sponsoring a plan, including the potential for expensive and time-consuming litigation. Allowing employers to join a pooled arrangement addresses all of these issues. Accordingly, it is incumbent on the Department to make sure that the pool of potential arrangements for small and medium sized employers be as broad as possible.