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President Barack Obama’s final annual budget request, which he unveiled earlier this week, includes a proposal to expand access to retirement benefits.
The budget would accomplish that goal by creating open multiple-employer plans. Open MEPs would allow multiple employers to offer retirement benefits through the same administrative structure, lowering employer costs.
CBS MoneyWatch reports that expanding MEPs would help more smaller employers offer retirement benefits:
The trouble is, many small businesses don’t have the resources to design and implement retirement plans on their own, and they don’t have the group buying power to shop for low-cost plans.
Currently, MEPs are available to employers who share a common bond, such as those whose employees are members of the same union.
A subsection of the president’s budget titled “Helping All Workers Save for Retirement” explains that the budget proposes to remove the current requirement of a “common bond” between employers, “thereby enabling more small businesses to offer cost-effective, pooled plans to their workers and potentially facilitating pooled plans of self-employed individuals.”
Open MEPs would also help employees who change jobs, according to Obama’s proposal. Employees who move between employers participating in the same open MEP would be able to continue contributing to the same retirement plan.
CBS MoneyWatch reports that retirement industry experts and the financial services industry applaud open MEPs.
Kevin Crain, head of Workplace Financial Solutions at Bank of America Merrill Lynch, tells CBS:
“Open MEPs will encourage private sector financial institutions to work hand in hand with small employers to help expand retirement savings coverage.”
If your nest egg could use some help in the meantime, check out the Money Talks News Solutions Center, where you can find guidance on savings accounts, brokerages and other financial issues that impact retirement.
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