Multiple-Employer Plans May ExpandBy
Congress is likely to give smaller businesses the opportunity to join together to offer pensions to workers. That is now impossible for companies in different industries to do because of legal restrictions imposed by the 1974 Employee Retirement Income Security Act (ERISA). That law allows open multiple-employer plans (MEPs), but unrelated employers must have a “common nexus” to collectively satisfy plan administration requirements.
“If a small employer joins a MEP with many other small employers, the fixed costs of the plan are spread among the employees of all the participating employers, thus dramatically reducing the per-employee costs,” explained Krista D’Aloia, associate general counsel at Fidelity Investments, who testified at a House Education and Labor Committee hearing on behalf of the American Benefits Council.
The Retirement Security for American Workers Act (H.R. 854) would remove some of the barriers to open MEPs. It is included in the Retirement Enhancement and Savings Act of 2018 introduced in the House and the Senate by a Democrat and a Republican (H.R. 5282/S. 2526). Given the bipartisan support in both houses of Congress, eventual passage of the overall bill containing the MEP changes is as good a bet as there is in Washington these days.