The U.S Labor Department introduced a proposal to expand access to employer-provided retirement plans to facilitate the formation of association retirement plans or multiple employer plans.
Under this structure, multiple small businesses can join together to make retirement plans available to their employees. The proposal is in response to an executive order by President Donald Trump last year to remove barriers impeding more employers from sponsoring retirement plans.
The Insured Retirement Institute (IRI) supports the proposal to form association plans, which it backed in its 2018 Retirement Security Blueprint.
“We welcome today’s proposal to help make retirement security a reality to some of the approximately 38 million U.S. private-sector employees who do not have access to an employer-provided retirement savings plan,” Cathy Weatherford, IRI president and CEO, said. “IRI and its members will carefully review this proposal and provide constructive input to the regulatory process.”
The Labor Department said these association retirement plans could be offered by associations of employers in a city, county, state, or a multi-state metropolitan area. They could also be offered in a particular industry nationwide and Professional Employer Organizations. Sole proprietors and their families will also be permitted to join them.
The Labor Department proposal seeks to reduce administrative costs through economies of scale and improve small business negotiating power with financial institutions and other service providers.
IRI hopes this proposal will spur Congress to enact retirement security legislation that puts into law the reforms being proposed in the regulation. Currently, such legislation has passed in the House and is awaiting consideration by the Senate.