Making good on a pledge of retirement plan portability from the State of the Union address, President Obama has initiated a campaign to establish a Multiple Employer Plan (MEP) for small businesses.
“And for Americans short of retirement, basic benefits should be just as mobile as everything else is today.”
-President Obama, 2016 State of the Union
The legislation announced in a White House blog “proposing legislation to allow multiple unrelated employers to come together and form pooled 401(k)s, resulting in lower costs and less burden for each employer.” The blog was posted by Secretary of Labor, Thomas Perez and Jeffery Zients, the Director of the National Economic Council, said that the results will show “more small businesses should be able to offer cost-effective plans to their employees, while certain nonprofits and other intermediaries could create pooled plans for contractors and other self-employed workers.”
The details of such a plan have yet to be drafted, but the concept is one that Congress will likely embrace. It is hard to dismiss as rhetoric the compelling statistics that makes this legislation so compelling:
Today, one out of three workers does not have access to a retirement savings plan, including half of workers at firms with fewer than 50 employees and more than three-quarters of part-time workers. Contractors and temporary employees are often unable to participate in employment-based plans. And workers without access to a plan at work rarely save for retirement: fewer than 10 percent of workers without access to a workplace plan contribute to a retirement savings account on their own.
Portability, ease of access, low cost and ease of management are indeed compelling features of the proposed legislation. It would appear to be a bi-partisan favorite, but in a hotly contested election cycle, it may not see a congressional vote for some time to come.
