A 2015 GAO report found that many retirees and workers approaching retirement have limited retirement resources. About half of households age 55 and older have no retirement savings such as a 401(k) or IRA. Among those with some retirement savings, the median amount of those savings is about $104,000 for households age 55-64 and $148,000 for households age 65-74, clearly insufficient for the 20-30 years they are likely to need to pay household expenses, to the extent those are greater than the amount of income Social Security and income from a pension plan, if any, can cover.

Today, there is less confidence in government social safety nets and more pressure on individuals for financial security. Further, MetLife’s 14th Annual U.S. Employee Benefit Trends Study found that over half of employees (55%) are worried about the sufficiency of their retirement savings. Private protection products including life insurance, income annuities and disability insurance supplement social insurance and guard against poverty when families and individuals face premature death, health issues or the end of employment income that comes with retirement. These products are growing in importance as life spans increase and the traditional workplace defined benefit plan has all but disappeared for most workers.

Nearly 80% of full-time workers have access to a workplace retirement plan, and more than 80% for workers with access participate. Employer-sponsored retirement plans offer more than 83 million American workers and their families the opportunity to accumulate savings and improve retirement security. For low and moderate income workers, 71% are more likely to save for retirement when an employer offers a plan. The lowest quintile income workers, for whom all of current income is needed to support current household needs, are least likely to have access to a plan or to contribute to one if available. These are the workers for whom Social Security will replace the highest percentage of their employment income in retirement.

Over half, 55%, of employees worry about outliving their retirement savings, according to MetLife’s 14th Annual U.S. Employee Benefit Trends Study. From market risk to inflation risk to the reality that Americans are living longer than ever before (i.e., longevity risk), employees are facing a whole new set of challenges when it comes to retirement income planning. With the shift from defined benefit to defined contribution plans, participants have found themselves in the past decade in a position to need to figure out – often largely on their own – how much to save for retirement, how much they can draw down from their savings in retirement and how long they are likely to live. Because of this, 85% of employers now believe that retirement income should be the outcome of any retirement plan, according to MetLife’s 2016 Lifetime Income Poll. This a big shift from the 9% of plan sponsors who said that retirement income should be the primary focus of DC plans in 2012. Incorporating an income annuity into a retirement plan ensures that employees’ retirement savings can be converted into a predictable stream of income that will last throughout their lifetime.

Yes, we believe that open multiple employer plans would encourage and facilitate participation by employers that are not prepared to sponsor their own retirement plan for a variety of reasons. MEPs can be an important tool in reducing the costs and administrative burdens to small employers. MEPs offer the same key protections and benefits of any employer-sponsored retirement plan to participants, such as fiduciary protections, robust contributions levels, and employer contributions, without the cost and administrative burden that often deters small employers with limited staff and resources from offering a plan.