Who’s Working for You?: American Benefits Council

In a series of articles, PLANSPONSOR is profiling industry groups that work for retirement and health plan sponsors to protect them from onerous burdens and help them with plan design and administration. In this article we profile the American Benefits Council (ABC).

The American Benefits Council (ABC) is 50-years-old this year.

Jim Klein, president of the American Benefits Council in Washington, D.C., says in 1967, large employers interested in sharing information about employee benefit developments, as well as service providers, started the group as an information exchange. According to Klein, after the Employee Retirement Income Security Act (ERISA) was enacted, the group’s board felt there was no group in Washington to represent and advocate for plan sponsors, so it became a 501(c)(6) advocacy association.

The group was called the Association of Private Pension and Welfare Plans, and changed its name to American Benefits Council in 2000. Its mission statement is: “The American Benefits Council advocates for employers, connecting public policy and private-sector solutions to shape employee benefits for the evolving global workforce.” Klein says the mission statement was very recently changed for two reasons: one is, the prior statement used the term “voluntary benefit plans” which has taken on a new meaning, and secondly, the group has gotten more involved in global benefit issues, as well as domestic issues.

The ABC currently has 425 member companies, mostly large employers, including 62 of the Fortune 100 and 172 of the Fortune 500.

Plan Sponsor Interests

According to Klein, with regard to health care, ABC’s members are concerned about what is going to happen with Affordable Care Act (ACA) repeal and replacement effort, and the implications it will have. “Most of the debate has been about individual insurance market coverage, which is important for large plan sponsors, because they want to make sure policymakers are focused on implications for employers, preserving the uniform framework under ERISA and ERISA’s preemption over state laws,” he says.

In addition, Klein says, “The Cadillac tax is viewed by members as a threat that can erode employer-based coverage. We have established a coalition to fight it—Alliance to Fight the 40—which also addresses imposing a cap on the exclusion for providing health care coverage.”

Diane Howland, vice president of Legislative Affairs for the ABC in Washington, D.C., says retirement plan sponsors are concerned about full or partial Rothification of defined contribution (DC) plans. “We believe this could have an immediate detrimental impact on DC plans,” she says.

According to Howland, tax reform also impacts defined benefit (DB) plans, and DB plan sponsors are concerned about funding rules and Pension Benefit Guaranty Corporation (PBGC) premiums. “The continued viability of DB plans is on the line. Plan sponsors can’t control accounting rules, volatility of assets or fluctuation of interest rates,” she says.

In addition, an exemption for the ERISA preemption for state retirement plans would affect plan sponsors’ decision to sponsor retirement plans, Howland says. This is of particular importance to employers with employees in multiple states.

How ABC Advocates

The ABC advocates for plan sponsors in multiple ways, according to Howland, including by face-to-face discussions with legislators and regulatory agencies. The ABC also comments on proposed regulations.

For example, the ABC is engaged in continued efforts with lawmakers for electronic disclosures of retirement plan data. “There are bipartisan bills in Congress to permit electronic disclosures. We are making an effort to get those enacted, and are guardedly optimistic,” Howland says. Klein adds that the ABC also is pushing for electronic disclosures for health plan data.

Klein says the ABC meets with members of Congress, testifies at congressional hearings and engages members to be involved in grass roots activities in their states with their constituents. The ABC also has a Washington representatives group—member companies that are based in D.C. or come to D.C. to advocate. “Frequently, some are expert lobbyists and provide an expert plan sponsor voice,” he notes.

In addition, if one member company has an issue with about the way current laws or regulations may affect them, the ABC makes a special advocacy effort and can often engage with lawmakers or agencies to get information clarified to make sure a law or regulation doesn’t cause a problem with that member.

Klein adds that very often Congress will write a law and then carve out provisions for small employers so it’s not applicable to them. He says lawmakers see that problems exist much more commonly among small employers. But, the ABC has suggested that instead of, or in addition to, small employer carve outs, lawmakers give large employers carve outs when a provision is not applicable to large employers. In addition, when regulations are issued, regulators are required to make a statement under the paperwork reduction act about how many hours it thinks employers will take to comply. The ABC believes the onus should be on regulators to make sure the policy they are seeking cannot be obtained in a less burdensome way than what they’ve proposed.

Jason Hammersla, senior director of communications for the ABC in Washington, D.C., adds that the council advocates on a judicial level, solo or with groups, to file amicus briefs in court cases against plan sponsors.

For retirement plans, Klein says the ABC counts as an advocacy “win” that its retirement income task force first developed the concept of catch-up contributions starting at age 50. “This was in particular a response to the retirement security of women who may have had a gap in saving,” he says.

Also when the ACA was being considered, there was a provision in section 13-32 giving state innovation waivers. Klein says Congress is strongly looking into this now—giving states more flexibility. The original version granted ability to issue these waivers to three different cabinet secretaries, and the ABC persuaded lawmakers to remove the Secretary of Labor from having this ability because of a concern that in the future this could lead to erosion of the ERISA preemption over state laws.

Klein adds that authors of the legislation to repeal the Cadillac tax would argue that the ABC’s coalition played an important influence on delaying the tax to 2020.

Howland adds that leading up to the passage of the Pension Protection Act (PPA), the ABC had an influence on funding rules for DB plans. “If not for that, the rules would have been more onerous and difficult to comply with,” she says.  Also, leading up to the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), in addition to provisions about catch-up contributions, the ABC gave input about increasing statutory limits on retirement plan contributions.

Klein says in more recent years, the ABC has successfully ensured additional funding stabilization for DB plan sponsors to have a smoother duration period to meet funding rules, and it has continued its efforts to hedge PBGC premium increases accompanied by funding relief.

Most pressing for the ABC right now, according to Klein, is ensuring ACA efforts do not intentionally or inadvertently affect negatively the employer-sponsored system—that state waivers do not affect how multistate employers operate and are confined to the individual marketplace. The elimination of the Cadillac tax is also a top priority.

According to Howland, at the top of the list for retirement plans is tax reform, helping expand coverage and advocating for multiple-employer plans (MEPs), an additional safe harbor for automatic deferral escalation and electronic disclosures of retirement plan information.

Klein adds that the ABC is focused on making sure the way state laws are written do not affect employer plans. For example, he says, “Our members provide excellent paid leave, but as states have passed their own laws, it has become a huge administrative and costly headache to try to comply with the variety of approaches. We advocate for a voluntary federal standard for state and local laws to comply with.”

Resources ABC Provides

Klein says the ABC offers a benefits compliance center as a resource, with attorneys on staff that can answer questions for members or find them out through relationships with lawmakers and regulators. The council also performs benchmarking surveys for members to find out how fellow members are designing plans or dealing with strategy, compliance or communications issues. The ABC also has a feature on its website to help members determine what the laws are across the country at the state and local level.

The ABC has task forces that meet several times a year to deal with particular issues, and it holds meetings around the country for which ABC staff goes to metropolitan areas to meet with companies and give members legislative and regulatory updates and facilitate the opportunity for them to share strategies with each other.

Globally, the ABC has established a relationship with the International Employee Benefits Association (IEBA) in Brussels. “It’s not an advocacy organization but an information exchange. The ABC serves as the U.S. chapter of the IEBA, and any of our members can tap into its resources,” Klein says.

The ABC is also a private-sector adviser to the U.S. government for the Organisation for Economic Co-operation and Development (OECD) in Paris. “Through that body, we can ensure our government is doing what it can to help U.S. companies operate abroad,” Klein says.

Hammersla adds that the ABC hold webinars to inform members, and there are podcasts on its website that are not just for members, but open to the public. “I interview plan sponsors about their efforts. I just did one about answering Millennials’ questions about saving for retirement,” he says, adding that there will be more to come.