NAM Comments on Proposed DOL Association Retirement Plans Rule

By | Shopfloor Legal, Shopfloor Policy | No Comments

When the Department of Labor (DOL) announced last fall that it was proposing a rule that would make it easier for small businesses to offer retirement benefits to their employees, the NAM praised the decision, calling it “a significant step toward allowing small manufacturers to use competitive 401(k) plans to attract talent in a tightening labor market.” Now, the NAM has partnered with the American Society of Association Executives (ASAE) to submit official comments to help DOL implement its proposed Association Retirement Plans (ARP) rule.

Under the DOL’s ARP proposal, small businesses connected by either geography or industry would be able to band together through a trade association or local business group to offer a single retirement plan for their employees – reducing the cost of offering retirement benefits and thus allowing growing companies to better attract and retain skilled workers.

Employees at small businesses constitute the backbone of our national workforce, and they face an imminent retirement savings crisis. Just 53 percent of workers at companies with fewer than 100 employees have access to a workplace retirement plan, and only 37 percent of small business workers participate in such a plan. Reducing the costs for smaller employers offering a 401(k) will bolster retirement savings for hard-working Americans across the country.

In the comment letter, the NAM and ASAE urged the DOL to clarify that members of manufacturing associations qualify as sharing a common interest under the rule, remove state-level barriers to employer participation in an ARP, and ensure the long-term stability of the program. We also asked the DOL to move quickly toward implementation so that small manufacturers and their employees can benefit from these important reforms in the near term. Once finalized, the ability of employers to offer ARPs will help ensure the financial security of American workers and support a thriving manufacturing workforce.

International Pricing Index Proposal Veers Away from Market-Based Principles and Puts Government in the Driver’s Seat

By | Health Care, Shopfloor Policy | No Comments

Before the year closed out, the National Association of Manufacturers (NAM) requested the administration reconsider its proposed International Pricing Index (IPI) model for Medicare Part B drugs and urged the administration to maintain free market principles as well as the spirit of open competition. The IPI model, if implemented as designed, would send a strong signal that future treatments should be more limited for patients and controlled by the government, thereby curtailing the incentive for the development of new cures. In the comment, the NAM stressed:

The proposed shift to an international pricing model for certain classes of medicines and treatments highlighted in the ANPRM do not offer a fair or a comparable benchmark for prices in the United States. The HHS/CMS proposal highlights 14 nations, including many with government-run national health systems that operate off a dramatically different set of values and cost controls. Many of these systems differ markedly from the American market-based system that provides consumer choice and honors innovation. Grafting those approaches onto our innovative, free-market economy would be highly problematic, undercutting innovation, failing to reward health outcomes and neglecting to address many of the most important cost drivers in our own health care system.

Manufacturers support a successful and affordable health care system that honors innovation, protects intellectual property and avoids government-driven demands that are contrary to basic free market principles. Health care stakeholders—including makers of medicines and patients—should not be presented with false choices in efforts to improve affordability. Reforming existing programs are important endeavors that must be pursued, but maintaining critical market-based approaches should not be sacrificed in these efforts.

House Tax Package Includes NAM-Supported Pension Reforms

By | Shopfloor Policy, Taxation | No Comments

In late November, House Ways and Means Committee Chairman Kevin Brady (R-TX) unveiled a package of tax extenders and technical corrections to last year’s landmark tax reform legislation. Included in the bill is a pension provision that will make it easier for manufacturers to offer competitive retirement benefits to their employees.

When companies transition from a traditional defined benefit (DB) pension plan to a defined contribution (DC) 401(k) plan, many businesses grandfather longer service employees into the existing DB pension and offer the new 401(k) only to new employees. This allows existing employees to remain in their longstanding pension plan as they near retirement.

This approach, called a “soft freeze,” allows companies to provide competitive retirement benefits to all employees, regardless of their tenure. However, over time, these plans can trigger IRS nondiscrimination rules as the employees in the DB plan continue to increase in both time served and compensation relative to the newer employees in the DC plan. This can lead to companies being forced to institute a “hard freeze” on the plan, meaning that employees miss out on their prime years of benefit accruals.

Chairman Brady’s legislation provides an alternative solution that would modify the nondiscrimination rules to allow plan sponsors to protect grandfathered employees when transitioning from a DB to a DC plan structure. Provided that the plan does not violate any nondiscrimination rules when it is set up and no significant changes are made going forward (other than changes in employees’ employment status and/or compensation), it would not violate nondiscrimination rules as the longer service DB employees advance through their career.

This targeted reform would prevent companies from unintentionally violating the nondiscrimination rules, allowing manufacturers to compensate employees competitively and attract talent in a tightening job market. The NAM signed a coalition letter supporting this change, which is modeled after bipartisan legislation introduced by Reps. Pat Tiberi (R-OH) and Richard Neal (D-MA) and Sens. Rob Portman (R-OH) and Ben Cardin (D-MD). The National Association of Manufacturers will continue to advocate this important reform as the tax bill moves through Congress.

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