Solutions to expand access to retirement plans are making headway at the city level
The conversations around expanding access to retirement plans have mostly been centered around the state-run auto-IRA solutions that are being implemented in five states and the need for policymakers to pass legislation at the federal level that would allow the private sector to offer open multiple employer plans.
But there is another conversation unfolding at the city level, prompted by the Department of Labor’s proposal in August to allow cities with populations larger than the smallest state to set up city-run auto-IRA programs. New York City, Philadelphia and Seattle are the first cities to express interest in setting up such plans.
“As more cities start to understand the role they can play in improving the retirement security of their citizens, it is important that they understand all of the available options on the table,” says Bennett Kleinberg, vice president of Innovation for Prudential Retirement, who recently spoke on a panel at a retirement security symposium in Philadelphia. “Cities may want to consider using an open multiple employer plan.”
While the private sector is not permitted to establish an open multiple employer plan under current federal law, the Department of Labor recently sanctioned the concept of such plans for states and cities, citing the “unique representational interest” between a state or city and its residents, Kleinberg explains.
Open multiple employer plans may soon become a reality for the private sector, too. In September, the Senate Finance Committee unanimously passed legislation for open multiple employer plans, which Washington insiders say will likely be attached to a year-end spending bill.
“We’ve been a long-time advocate for open multiple employer plans as a way to expand access to retirement savings plans, particularly for individuals working for small businesses,” Kleinberg says, “and it’s great to see progress being made at the city, state and federal level.”
Interested in learning more? Read the recent article in the Philadelphia Enquirer. Want to speak with Bennett? Contact Monique Freeman.