Labor Secretary Alexander Acosta hit the road Friday to talk about the nation’s retirement savings gap and promote the DOL’s recently introduced multiple employer plan (MEP) proposal.
“Only 14 percent of small businesses now offer retirement plans to employees,” Acosta noted in a discussion with Indiana’s Republican Senator Todd Young at Indiana State University.
The proposal, along with federal legislation proposed by Young, “would enable small- and medium-sized businesses to offer workplace retirement plans similar to 401k plans offered to employees of bigger companies,” The Tribune-Star reported.
Acosta said many of the country’s small business owners find it too costly or onerous to offer employees retirement plans, which must be monitored and accounted for, and which can pose a risk of lawsuits, according to the paper, adding small businesses employ about 47.5 percent of American workers.
Young said there are “approximately 40 million Americans [nearly a third of private-sector workers] who work but don’t have access to a retirement security plan at work.
“So, for our smaller businesses, the cost and litigation risk of setting up a new plan is often prohibitive for them to allow their employees to save more for their retirement.”
The DOL released a “Notice of Proposed Rulemaking to help small businesses strengthen retirement security in America” in October.
The proposed rule would make it easier to offer MEPs, which the DOL refers to as Association Retirement Plans, allowing small businesses to band together to offer 401k plans to employees.
Largely seen as a bipartisan issue, the department notes enhancing workplace retirement savings is critical to the financial security of America’s workers.
Under the proposed rule, Association Retirement Plans could be offered by associations of employers in a city, county, state or multi-state metropolitan area, or in a particular industry nationwide.
The Retirement Security Flexibility Act, introduced by Young and co-sponsored by Heidi Heitkamp, D-N.D., Cory Booker, D-N.J., and Tom Cotton R-Ark., would add safe harbor for automatic enrollment and deferrals to make it easier for employers to offer the plans.