Executive Order on Multiple Employer Plans Opens the Door for More Small Business Retirement Savings Options
Statement by Small Business Majority Founder & CEO John Arensmeyer says even though multiple employer plans can be good for small businesses, other retirement savings options that encourage more employer participation are even better
President Donald Trump’s executive order that would remove legal hurdles that make it harder for small businesses to band together to form multiple employer retirement savings plans (MEPs) is a first step to discussing what officials can do to help small firms struggling to offer retirement benefits to their employees.
President Trump’s order calls for regulators to change a current law that requires all MEP participants to have some form of connection or association. When properly regulated, MEPs can be beneficial to small firms because small businesses typically cannot afford to offer retirement savings options to their workers, putting them at a disadvantage when competing with big businesses for top talent. MEPs are not without concerns, however, and President Trump’s order does not address these concerns.
If lawmakers want to encourage more small businesses to join MEPs, they must also protect small firms by passing the Retirement Enhancement and Savings Act (RESA). This bipartisan legislation would require pension equity plan providers to accept fiduciary responsibility and take responsibility for numerous administrative tasks that are typically outsourced but still the responsibility of the plan sponsor under current law. Without this measure, employers would be exposed to substantial liability.
While opening MEPs provides another option to the nation's small business owners, they are not a catch-all solution. This is why we need more “Secure Choice” retirement savings programs. These programs, which already exist in states like Oregon, Illinois and California, are public-private partnerships that allow private-sector employees to contribute to an individual retirement savings account (IRA) through modest payroll deductions. Employees are automatically enrolled in these programs, though they may opt out. This is a particularly good for small businesses because it allows them to provide valuable benefits at no cost to their firms, and small businesses strongly support them.
When done the right way, MEPs are a great way for small businesses to offer retirement savings plans to their employees. There are also more effective options already on the table including Secure Choice. We hope President Trump’s action spurs lawmakers to have serious discussions about how they can help level the playing field for small firms by increasing the benefits available to the millions of Americans who work for small businesses.
About Small Business Majority
Small Business Majority is a national small business advocacy organization, founded and run by small business owners to focus on solving the biggest problems facing America's 28 million small businesses today. Since 2005, we have actively engaged small business owners and policymakers in support of public policy solutions, and have delivered information and resources to entrepreneurs that promote small business growth and drive a strong, sustainable economy. We are a team of more than 30 working from our 11 offices in Washington, D.C. and 9 states, with a network of more than 45,000 small business owners and more than 2,000 business organizations, along with a formal strategic partnership program of more than 125 business organizations, enabling us to reach more than 500,000 entrepreneurs. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about issues including taxes, healthcare, access to capital, entrepreneurship, workforce development, clean energy and immigration. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.