Posted on July 20, 2020

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today urged the U.S. Department of Labor (DOL) to take necessary steps to implement key provisions of a new federal retirement security law that will expand the number of workers with access to employer-provided retirement plans.

IRI was a leading advocate in the effort to enact the Setting Every Community Up for Retirement Enhancement (SECURE) Act in December 2019. Among the measure’s most critical features was a provision to expand the ability of small businesses to offer employees access to retirement benefits through pooled employer plans (PEPs).

“By authorizing the establishment of PEPs, the SECURE Act will greatly increase access to retirement plans for hard-working Americans,” said Jason Berkowitz, IRI Chief Legal and Regulatory Affairs Officer.  

PEPs and other multiple employer plans (MEPs) provide a way for small businesses to offer workplace retirement plans through which employers can achieve economies of scale while significantly reducing the administrative burdens and potential liabilities associated with operating single employer plans. As a result, employees of these organizations have access to the same retirement savings opportunities already enjoyed by employees of large companies on a near universal basis through 401(k)s and similar defined contribution plans.

In response to a request for information (RFI) from DOL, IRI urged in a comment letter that “…the Department should not impose extensive conditions or limitations on the types of entities that can sponsor a PEP. We believe a competitive marketplace is the most effective and efficient deterrent to unqualified entities entering the PEP space.”

IRI noted that the SECURE Act does not expressly specify whether particular types of entities may offer PEPs and added that financial services firms that offer PEPs and act as pooled plan providers (PPPs) would provide significant benefits to employers and their employees.

“Financial institutions are well-positioned to leverage their existing relationships to improve financial literacy and encourage more Americans to save for retirement,” IRI wrote. “Appropriate safeguards will be needed to ensure that PPPs effectively manage the conflicts of interest that could arise if, for example, a PPP offers to sell its own proprietary products or services to participating employers or their workers. A prohibited transaction exemption subject to reasonable conditions would be needed under such circumstances.”

Permitting financial institutions to sponsor MEPs and PEPs was included among IRI’s public policy priorities in its 2020 Federal Retirement Security Blueprint, which was released in February.

IRI urged the Department to undertake this regulatory project and to promptly complete the steps called for by the SECURE Act.

“A cost-effective, easy-to-use workplace retirement savings program is an important tool for building retirement security,” Berkowitz said. “Reducing the number of workers without access to a workplace plan should be a top priority for the Department.”

# # #

Contact: Dan Zielinski