A senior Prudential executive is calling upon the government to promote the development of multiple employer plans, which allows many small employers to pool their resources together under a single defined contribution plan.
The structure will help companies overcome many of the obstacles related to compliance and administration costs that keep many businesses from launching such plans for their employees, according to testimony presented yesterday by Prudential Retirement’s Jamie Kalamarides, senior vice president of Institutional Investment Products, during a U.S. Senate Special Committee on Aging hearing on the shortage of retirement savings plans among small businesses senior vice president of Institutional Investment Products.
Government officials estimate that more than 78 million employees in the United States do not have access to a retirement plan.
Kalamarides testified that compliance with the reporting, disclosure and fiduciary requirements of the Employee Retirement Income Security Act (ERISA) may be a concern for many small employers. Transferring these responsibilities to a retirement professional through a multiple employer plan would remove a major impediment preventing small employers from launching retirement plans.
However, Kalamarides noted that in order for multiple employer plans to have a chance, a number of legislative and regulatory changes are necessary. Such changes include directing the Department of Labor to issue regulations providing simplified alternatives for plan administrators to satisfy their annual reporting and description duties. The DoL would also need to clarify the nature of fiduciary responsibilities of participating employers and other designated fiduciaries. Moreover, the Internal Revenue Services would need to issue regulations insulate compliant participating employers and their employees from harmful effects of noncompliance by other employers.
Tommy Fernandez writes for Money Management Executive.