In a new survey of more than 400 adopting employers, nearly half of them (47%) took advantage of the availability of a pooled plan to introduce their first employee retirement plan.
Transamerica today released the results of its first-ever survey of pooled retirement plan adopters, a study it says reinforces the power these shared plans wield in expanding access to retirement savings plans.
Many survey respondents were small- to mid-sized organizations and startups that have previously not offered retirement plans to employees because of the cost, administrative and fiduciary responsibilities.
The SECURE Act of 2019 opened up the use of Pooled Employer Plans (PEPs) to help small employers offer retirement plans with reduced administrative burdens and costs. Before the SECURE Act, multiple employer plans (MEPs) required a “common nexus” between participating employers, which limited their use. The SECURE Act eliminated this requirement, allowing unrelated employers to join together in a PEP.
“We are a small nonprofit and could not have afforded to spend time to manage a plan,” said one survey respondent who implemented a retirement benefit for the first time. “This is a great fit for an organization of our size.”
“Our survey provides empirical data that pooled plans are expanding access to programs that help everyday Americans save for a secure retirement.”
Transamerica’s Darren Zino
Darren Zino, head of retirement distribution at Transamerica, said the survey demonstrates the value of sharing costs and responsibilities when it comes to meeting the retirement savings needs of employers and employees. “Our survey provides empirical data that pooled plans are expanding access to programs that help everyday Americans save for a secure retirement,” he said.
Another key survey finding is that 44% of respondents said the top reason for offering a retirement plan was as a tool to attract employees. As employers of all sizes vie for talent, retirement savings plans are a benefit that can help employers stay competitive. According to the U.S. Chamber of Commerce, companies of all sizes across the country are facing unprecedented challenges finding workers to fill open jobs, with 8.1 million job openings and only 6.8 million unemployed workers.
“Offering a retirement savings plan is becoming a non-negotiable benefit,” said Zino. Transamerica’s survey found that 72% of start-ups and 61% of organizations converting to a pooled solution said it improved retirement planning for employees.
The new survey reinforced the need for continued education, with 77% of respondents saying that they had little to no familiarity with pooled plans prior to adoption.
The report is available on Transamerica’s website.
SEE ALSO:
• Industry Groups Press Congress to Finalize SECURE 2.0 Technical Corrections
• Transamerica and Cetera release new group retirement plan solution