LIMRA Finds Growing Interest in PRTs and MEPs

Even though pension risk transfer is better understood by plan sponsors, LIMRA hopes pending legislation that would open multiple employer plans to more employers will create an opportunity for greater plan access.

Emerging data from a new LIMRA report studies awareness and interest in Pension Risk Transfer (PRT) transactions and multiple employer plans (MEPs), given the growing challenge among plan sponsors in funding retirement plans.

The LIMRA Secure Retirement Institute (SRI) study reports eight in 10 private-sector defined benefit (DB) plan sponsors—that are also offering a defined contribution (DC) plan—have at least minimal interest in PRT. Four in 10, however, are saying they have a high interest in the feature. This attention towards PRT has gone up considerably since 2014, from 32% of employers reporting an interest up to 44% in 2019. According to the study, half of all employers with frozen DB plans would like to offer PRT products, while 39% of those with active DB plans are curious about them. 

While PRT transactions continue to gain momentum, MEPs are just growing traction in the plan sponsor community, largely due to the recent attention towards the Setting Up Every Community for Retirement Enhancement (SECURE) Act of 2019. Just 36% of all employers are somewhat or very familiar about MEPs, and only 29% of small employers with fewer than 50 workers understand the term, according to Dave Levenson, president and CEO of LIMRA. However, given recent participant reaction towards MEPs and new legislation from the SECURE Act, Levenson is hopeful employer awareness will swing upwards.

“From an employee perspective, they want the benefit of a plan, but from an employer perspective, they’ve got concerns about costs in the administration,” he says in an interview with PLANSPONSOR. “But they’re not really aware of these MEPs, which hopefully the new piece of regulation will create a big opportunity for the industry.”

The SECURE Act was first introduced in the House of Representatives earlier in the year, and gained wide attention due to its similarity in core provisions with the Retirement Enhancement and Savings Act (RESA), one being the creation of open MEPs. It’s since been passed by the House and is now awaiting Senate approval following the summer recess.

Should the SECURE Act pass through the Senate and be signed into law, Levenson believes the industry will likely see greater awareness surrounding MEPs among small employers who typically cannot afford the cost in offering a retirement plan. Currently, LIMRA findings show that if eligible, 56% of U.S. employers would consider providing a MEP.

“Employers generally want to offer plans, but there’s challenges,” he says. “A MEP creates a lot of opportunities for employers, especially to employees who don’t have access to plans.”