Strengthening retirement security in the United States

Tuesday, September 18, 2018 | By Chris Robino

Strengthening retirement security in the United States

Are you confident that you have saved or are saving enough money for retirement? For many Americans, the answer depends on whether or not they have access to a workplace retirement plan (e.g., a traditional pension, 401(k), 403(b), or SIMPLE IRA plan). According to many studies, the problem is that far too few American workers have access to these plans.

Citing data from the Bureau of Labor Statistics, the Trump administration indicates that “23 percent of all private-sector, full-time workers lack access to a workplace retirement plan. That percentage increases to 34 percent when part-time workers are taken into account. Small businesses are less likely to offer retirement benefits. In 2017, approximately 89 percent of workers at private-sector establishments with 500 or more workers were offered a retirement plan compared to only 53 percent for workers at private-sector establishments with fewer than 100 workers.”

These statistics illustrate what is commonly referred to as the retirement plan “coverage gap.”

Closing the coverage gap has been the focus of many state and federal legislative proposals over the past several years. Adding his voice to the debate, President Trump issued an executive order on August 31 outlining the administration’s retirement policy initiatives designed to expand access to workplace retirement plans for American workers. These policy initiatives include the following:

  1. Expanding access to workplace retirement plans by revising or eliminating rules and regulations that impose unnecessary costs and burdens on businesses, especially small businesses, and that hinder formation of workplace retirement plans
  2. Expanding access to multiple employer plans (MEPs)
  3. Easing regulatory burdens on plan sponsors by reducing the number and complexity of employee benefit plan notices and disclosures currently required
  4. Updating the rules regarding the calculation of required minimum distributions (RMDs)

Consistent with these policies, President Trump has directed the Secretary of Labor to consider within six months of the date of the executive order, whether to issue a notice of proposed rulemaking or other guidance to clarify and expand which U.S. employers may sponsor or adopt a MEP. Existing labor regulations require employers to share commonality, or a nexus (e.g., participation in a trade group) other than the plan, in order to be able to participate in a MEP. The President’s directive is likely geared toward reconsidering this commonality requirement in an effort to expand MEP access to small employers.

Similarly, President Trump has directed the Secretary of the Treasury to consider, over this same six-month period, whether to propose amended regulations or other guidance designed to address the “one bad apple” rule that is currently in place for MEPs. Existing regulations provide that if one or more employers that have sponsored or adopted a MEP fail to meet qualification requirements under the Internal Revenue Code, then the qualified status of the entire plan, for all employers, may be jeopardized. This “one bad apple” rule is often cited as a burden that hinders the adoption of a MEP by small employers, and the directive appears to be geared at easing or eliminating this hurdle.

Additionally, President Trump has directed the Secretary of the Treasury to work with the Secretary of Labor, within one year, to complete a review of actions that may be taken to make required notices more understandable and useful to participants, while also reducing the costs and administrative burdens the notices impose on plan sponsors and administrators. More importantly, the Secretaries have been directed to explore the potential for broader use of electronic delivery of required notices as a way to improve the effectiveness of the disclosures and reduce their associated costs and burdens, and, if necessary, to consider proposing appropriate regulations or guidance.

Lastly, with regard to RMDs, the Secretary of the Treasury has been directed to examine, over the next six months, the life expectancy and distribution period tables in the RMD regulations and determine whether the tables should be updated to reflect current mortality data.

What does this mean for the retirement industry? All of the initiatives outlined in this executive order are positive developments and are geared toward greater adoption of the plans that we service. In the event that applicable regulations are updated as a result of this executive order, we will likely see greater adoption of MEPs on TRAC, our core recordkeeping platform, and less dependency on printed materials for required notices.

However, it is important to keep in mind that this is just the very beginning of the rulemaking process. Notices of proposed rulemaking, consistent with these initiatives, are likely six months to a year away, and the rulemaking process will include a notice and comment period on the proposed and final regulations.

Therefore, the takeaway here is that the administration has clearly signaled its intent to make changes to applicable regulations and guidance geared toward greater adoption of workplace retirement plans by easing administrative burdens and costs; however, we are still a long way from reaching that goal.

Regardless of when those changes occur, SS&C and DST Retirement Solutions have developed products, services, and solutions necessary to meet our clients’ needs. Our core recordkeeping platform, TRAC, already has the services and features required to service MEPs. Our Learning Center enables a digital user experience while our Communications Smart Hub enables delivery of notices and disclosures both electronically and print. More to come.

To learn how we can help you with your retirement servicing needs, please contact us at


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