The Government Accountabilty Office is embracing the idea of multiple employer plans.
Workers at small employers, it said in a study, face an uphill climb when it comes to building adequate retirement savings, given that only 14 percent of small businesses offer retirement plans. That means that many will have to rely on Social Security benefits when they do retire.
Some small employers, the GAO said, find it difficult to select investment funds for their plan while others said they didn’t have the money, time or personnel to administer a plan.
Plan sponsors also didn’t understand the fees they were being charged and participants ended up paying higher recordkeeping and investment management fees than participants in larger plans.
That's why the GAO concluded that multiple employer plans, where more than one company joins together to offer retirement benefits, may be the best solution to help solve the nation’s retirement crisis.
Multiple employer plans could reduce costs because participating employers would pool assets to obtain the lower pricing available to larger plans.
These types of plans also could save employers money because they don’t have to draft an initial plan document, as they would in establishing a new single-employer plan.
Multiple employer plans also could reduce fiduciary liability since the administrator of the plan takes on some of the fiduciary duties.
Last September, the Department of Labor ruled that open multiple employer plans, made up of otherwise unrelated employers, did not constitute a single pension plan but an arrangement under which each employer sponsored a separate plan for its employees.