Transamerica Believes MEPs Can Provide Growth for Advisers

Multiple employer plans (MEPs) can provide not only business growth for advisers, but can also help close the coverage gap in America, said Jim Kais, vice president and director of institutional sales and special markets at Transamerica, speaking during a recent Webcast.

As defined by Transamerica, a multiple employer plan is a retirement plan that covers employers that typically have a common interest, but are independent entities. They are also typically small businesses with perhaps just a handful of employees. Kais outlined several reasons why a MEP may be the right solution for these companies. When an employer decides to join a MEP, they become an “adopting employer.” The plans can either be designed as a defined contribution (DC) or defined benefit (DB) plan.

Kais described the coverage gap many workers are currently facing. Ninety-four percent of full-time, for-profit employees feel that a 401(k) or other employee-funded plan is important, yet only 74% of full-time, for-profit employees at small companies are offered a 401(k) or other employee-funded plan. Transamerica believes that MEPs can help close the gap between small employers offering a retirement plan and those who do not.

Trying to manage a retirement plan individually involves a host of complexities for small-plan sponsors, said Kais, such as: fiduciary responsibilities, uncertainty about the future of the business, costliness, lack of understanding of business incentives to sponsor a plan, a disconnect between employer and employees on the value of a retirement benefit, lack of expertise in plan management, and the fact that they are administratively burdensome.

When weighing the decision on whether to join a MEP, Transamerica suggests that a plan sponsor consider the following questions:

  • Who will be the Trustee?
  • Who will be the Fiduciaries?
  • Who will be the Plan Administrator?
  • How is education and enrollment delivered?
  • What is the investment selection process?
  • Who provides and manages the plan document?
  • How flexible do they want the Plan?
  • How will compliance testing be handled?
  • Who is the common payroll remitter?
  • How much administration can be outsourced?

The Webcast also provided guidance for financial advisers who decide to work with a MEP, advising them to should keep the following points in mind:  

  1. offer clients top quality retirement plan services,
  2. help clients manage fiduciary responsibility,
  3. help clients best mitigate fiduciary risks, and
  4. provide value-added expertise to help clients maximize plan effectiveness and meet regulatory obligations.