PLANSPONSOR - April/May 2019 - 15

Open MEPs Could Change the Market
THERE are numerous proposed bills
that would pave the way for the use of
open multiple employer plans (MEPs)-
arguably the most well-known being the
Retirement Enhancement and Savings
Act (RESA)-and these bills have wide
bipartisan support.
Pete Swisher, senior vice president
and national practice leader at
Pentegra Retirement Services, notes that
present multiple employer plans require
a common nexus, such as industry or
locality, among the employers that participate.
Legislation for open MEPs would
remove that common nexus requirement.
Lawmakers and retirement plan
industry stakeholders support the idea of
open MEPs, also known as pooled employer
plans (PEPs), because they believe these
will be cheaper for small employers and
will improve employer-sponsored plan
coverage among working Americans.
Kelly Michel, chief marketing officer
for Envestnet Retirement Solutions (ERS),
says, " My personal take is MEPs will be
the next big disruptor for the retirement
plan market. They will impact nearly every
single stakeholder. "
Swisher says the government need not
specify that all MEPs be run in the same
manner, with one type of service provider;
instead, Congress can let providers innovate.
There could be various structures for
open MEPs-one that is centralized and
homogenous for plan sponsors; one that is
centralized but offers choices that can be
customized for employers; or even one that
is not fully centralized and keeps some
plan governance actions with employers,
he says. " We probably can't predict all the
different variations that would emerge, "
Swisher says.
Michel says employers currently
have many options to outsource fiduciary
responsibilities, but when they have the
opportunity to participate in an open MEP
and completely shift the risk of day-to-day
plan management, it could create a new
way of thinking for plan sponsors.
For this reason, Michel says, the
conventional wisdom that MEPs will be
a path for only small employers is shortsighted.
She contends that among large
plans there is little variance in plan
design; some have special provisions,
but, with the introduction of automatic
plan features, plan design has lost much
of its uniqueness. " If you're a large plan
sponsor and 80% of your plan provisions
are similar to that of a MEP, you'll weigh
TALKING POINTS
Living Up To Expectations
African-Americans and Chinese-Americans
were the most likely of six ethnic groups
surveyed to plan to retire at earlier ages.
Further, 74% of African-Americans and 68%
of Chinese-Americans indicated they expect
to live 20 years or more in retirement; 36% of
African-Americans expect to be retired for
30 years or more.
Source: 2018 MassMutual State of the American Family Survey
What Congress Should Do
Eighty-three percent of American workers
favor making it easier to save for retirement,
and 69% think policymakers should support
solutions that convert savings into an
income stream.
Source: Prudential, American Workers Survey
PLANSPONSOR.com April - May 2019 15
the uniqueness of your plan against the
risk of maintaining it yourself.
" Recordkeepers could be the biggest
market disruptors, " she continues. " We've
seen over the last decade more [of them]
taking on 3(16) administrator duties; it's
not far beyond that to sponsoring multiple
employer plans. "
" I've been saying for years, and
continue to believe, [open MEPs] are poised
for major growth, " says Swisher. " But the
entire industry will not be reshaped overnight.
Everything will happen gradually. "
-Rebecca Moore
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