Updated: Feb 9
Early in my professional career, I had the opportunity (and responsibility) of choosing and managing a 401k program for several employers. I found this to be a painful exercise for several reasons:
Expensive service providers
Difficult and costly set-up
Hard to identify a true cost of ownership
Plan design limitations prevented business from achieving its benefit goals
Sub-standard fund performance
Hidden fund fees
Online solution had poor customer service and didn't scale in price
Payroll integration and user platforms were “oversold” features
In my experience, being able to pick up the phone and speak with retirement plan experts and service staff was extremely rare.
Multiple Employer Plans (MEPs) are ERISA governed retirement programs offered through non for profit associations or member aggregator organizations. MEPs through their member based fiduciary structure address the pain points and challenges employers have historically experienced with offering a 401(k) program.
MEP's have a much more robust process for selecting and monitoring fund performance. Through the employment of a 3-38 advisor that reports to a member governed board, MEPs typically have a well defined investment strategy and strong fiduciary oversight, which leads to superior fund performance over time.
MEPs leverage the collective buying power of its participants to realize better fund pricing, lower professional costs, and streamlined employer administration. MEP's are simple to join and typically don't have set-up fees.
If you are an employer that currently doesn't offer a plan or is in a plan with high cost, poor fund performance or administrative complexity, I recommenced looking into a MEP.