As a former CPA and fiscal conservative, it’s always been a priority to teach my children about the benefits to saving for retirement at an early age. For many northeast Ohioans, saving for retirement is a constant concern. In fact, according to a recent AARP survey, nearly 40 percent of Americans above the age of 50 are dissatisfied with their retirement savings. Unfortunately, certain federal guidelines make it more difficult for businesses to provide retirement plans for their employees.
One method that businesses use to provide their employees retirement plans is to take part in a multiple employer plan (MEP), which allows them to achieve cost and administrative efficiencies. Unfortunately, the government only limits this arrangement to businesses who share a “common interest,” i.e. are in the same industry, limiting businesses’ options and savings.
That is why I am introducing bi-partisan legislation that would allow unrelated employers in different industries to join together to create Pooled Employer plans. These plans would further reduce administrative costs and complexities in order to make it easier for small businesses to offer employer-provided retirement benefits.
According to the GAO, about half of the country’s private sector workers do not have access to a workplace retirement savings program, especially individuals employed by small firms. Often times, small businesses do not have the ability to provide retirement savings plans for their employees due to the administrative cost and complexity in operating a plan. Additionally, nearly 30 percent of households age 55 and older have no Defined Benefit retirement plan or their own retirement savings through either a 401(k) or IRA.
Having operated a small business for over two decades, I know, like other northeast Ohio small business owners, how important it is to offer retirement accounts to our employees. When speaking about the need for this legislation, Cleveland-headquartered CBIZ stated, “We know that most business owners want to provide a retirement plan to their employees, but the cost and administrative burden are significant roadblocks when making this important decision. Pooled Employer Plans will significantly change this by allowing unrelated employers to pool together into one plan, create economies of scale, lower plan and employee cost to levels only the largest company retirement plans can negotiate, and most importantly, boost retirement savings!”
If signed into law, it is my hope that this bill will help small businesses to pool their resources and provide their employees with a retirement plan. It is well documented that American workers are more likely to save for retirement when they are able to do so through their employer versus on their own. It is time for Congress to act ease the burdens associated with retirement planning and make it easier for small businesses and their employees to save for their future.