Borzi Contemplates Regional Open MEPs
That “unique representational interest” that the Department of Labor (DOL) feels justifies the sponsorship of an open multiple employer plan (MEP) by a state for its citizens might extend beyond state boundaries.
Assistant Secretary of Labor Phyllis Borzi says that some New England states have approached the DOL for guidance about creating a regional MEP, “And we told them we’d be happy to work with them as they try to design it, but I don’t see any theoretical problem with doing that,” Borzi said, according to BNA.
In a recent Interpretative Bulletin
the DOL had laid out the “unique representational interest in the health and welfare of its citizens” as the rationale for a state to establish a MEP or a defined benefit plan for employers. While to date no states have passed legislation creating such an arrangement, under the DOL’s guidance the state itself would be the plan sponsor, the named fiduciary and the plan administrator (but could also delegate those responsibilities to third parties). Participating employers would be required to execute a participation agreement and would have limited fiduciary responsibilities (like prudently selecting the arrangement and a duty to monitor its operation).
In a recent program on developments at the Employee Benefit Security Administration (EBSA), Borzi not only described the state-backed open multiple employer plans, or MEPs, initiative as “virgin territory,” she went on to express the DOL’s support for these programs, explaining: “We want them to succeed, we want anybody to succeed, public or private sector who tries to expand coverage, because goodness knows, we need to do that,” according to the BNA report.
The guidance came at the direction of President Obama, who had told the DOL to “clear the way
” for these state-based retirement plan initiatives at the 2015 White House Conference on Aging last July.
The so-called “open” MEPs are single retirement plans involving two or more unrelated employers. The new DOL guidance relaxes prior rules that required participating employers to share a common employment-based nexus or other genuine organizational relationship beyond that of providing benefits, and stands in sharp contrast to the DOL’s long-standing reluctance to enthusiastically embrace the use of these so-called “open” MEPs for otherwise unrelated employer retirement plans.