The Colorado-based firm announced this week that it is planning to launch a new digital solution to make it easier for small employers to establish workplace retirement plans.
Launching in mid-2024, the new, end-to-end 401(k) offering will provide advisors and third-party administrators (TPAs) with a simplified means of setting up a retirement plan. The new program—called Ready Select—is designed for small and start-up plans with up to $1 million in assets.
According to the announcement, the new application will help to reduce the implementation timeline, as well as the financial and administrative cost of sponsoring a 401(k) plan, so that “advisors can help business owners spend less time administering their workplace benefits.” The system also includes integrated investment advisory services through a third-party ERISA fiduciary.
After working with an advisor or TPA to generate an on-demand proposal and complete the plan setup, small business owners and employees gain access to the digital solution, as well as financial wellness and education programs that Empower provides.
In years past, complexity and administrative burdens have created barriers to the creation of workplace retirement plans for small employers and start-up companies, the firm explains. What’s more, management teams are often busy with growing their business, such that taking on the additional work of providing retirement benefits can be daunting.
Citing data by the Small Business Administration, Empower notes that there are an estimated 33.2 million small businesses in the United States and approximately 62 million individuals who work for these employers. These employers represent many of the private-sector workers who are not currently covered by a workplace retirement plan.
“The time to eliminate the access gap is now, and we’re taking this head-on,” stated Empower President and CEO Edmund F. Murphy III. “We have the technology, the know-how and the support of advisor and TPA partners to address this problem for the millions of Americans who need a retirement plan.”
Murphy also applauded the public-private partnership inherent in the nation’s workplace savings system, which has played a critical role in helping to narrow the access gap.
As NAPA Net readers will know, Congress passed the SECURE Act in 2019 and the SECURE 2.0 Act in late 2022, which have made retirement plans more accessible to more workers. To that end, Empower notes that the retirement plan coverage rate of the lowest-income families increased by 25% during the three-year-period of 2019-2022—more than double the growth rate of any other income segment during the period, including years immediately following the enactment of the SECURE Act.
“Advisors and TPAs who use Ready Select will have the ability to help support small employers with cost-effective retirement plan choices that best meets the needs of their workforce,” added Joseph Smolen, Executive Vice President for Core Markets for Empower. “These partners know how to help employers and Empower stands ready to help them bring their know-how to new plans.”
Empower currently administers approximately $1.5 trillion in assets for more than 18.5 million investors through retirement plans, advice, wealth management and investments.
