What’s Next for MEPs?

By John Iekel • September 10, 2018 • 0 Comments
Multiple employer plans (MEPs) are very much a part of the recent discussion. But while President Trump’s Aug. 31 executive order gives a boost to MEPs, that doesn’t mean they’re an innovation of 2018. A recent white paper from Pentegra takes a look at their history, where they stand now, and what may lie ahead for them.

In “Pentegra’s 2018 Stance on Open MEPs,” Pentegra Senior Vice President and National Sales Director Pete Swisher and First Senior Vice President, General Counsel and Corporate Secretary Robert Alin seek “to spur constructive dialogue nationally about the best path forward with respect to MEPs.”

Swisher and Alin say that interest in group retirement plan solutions, including MEPs, “is at an all-time high,” Not only that, they say that Congress has long supported MEPs — and now, the executive branch is on board. “The president is directing the DOL and IRS to expand the availability of MEPs, based on the premise that MEPs can reduce costs and burdens associated with providing a retirement plan. It seems likely that the Executive Order will accelerate interest in MEPs,” they write.

Swisher and Alin outline what they expect in the future concerning MEPs:

Association Health Plans (AHPs) could be the model for MEPs. There has been broad agreement concerning Association Health Plans (AHPs), say Swisher and Alin, and they add that final regulations the DOL issued concerning them recently became effective. They argue that the AHP rules “may serve as a template for similar rules on retirement plan MEPs.”

Speed and type of new guidance. Noting that President Trump’s Aug. 31 executive order calls for a formal response within 180 days, Swisher and Alin argue that the timing of guidance will depend what kind of guidance the DOL and IRS issue.

“Sub-regulatory” guidance can be fast. “Sub-regulatory” guidance, such as an interpretation of existing regulations, rather than issuing a new regulation itself, is easier to draft faster to issue and implement and quicker than legislation or regulation, Swisher and Alin note. And such guidance, they argue, “may be sufficient to accomplish some or all of the Executive Order’s policy goals with respect to MEPs.”

Major policy changes take a formal process. The DOL and IRS may opt for a significant policy change regarding MEPs, which would entail a formal public comment and review process that will take longer.

Implications for the U.S. retirement system. Swisher and Alin suggest that MEPs “are poised to grow significantly” beyond the 1% market share they now have, and that the support of the Trump administration will accelerate such growth.

Powerful but not a silver bullet. “MEPs will not single-handedly close the retirement plan coverage gap or cut plan costs in half — as some suggest they will—but they enjoy a genuine structural advantage over single employer plans,” argue Swisher and Alin, who add, “This advantage is the driving force behind Washington’s interest in and the future growth of MEPs.”