The U.S. Bureau of Labor Statistics report suggests that only 66 percent of American employees working in small businesses (firms with less than 100 employees) have employer-provided retirement benefits. While there are many reasons for this, most employers site administration challenges as the primary reason for the lack of an employer-provided retirement plan.
The SECURE Act 2019 and SECURE Act 2.0 address these challenges by enabling small business owners to provide 401(k) and 403(b) plans to their employees. The Pooled Employer Plan or PEP, allow multiple unregistered private firms and small not-for-profit organizations to sign up as a PEP. Businesses can also benefit from the 100% startup costs coverage from SECURE 2.0 small business credit tax.
How Can They Leverage Cloud-Based Collaboration Platforms for Pooled Employer Plans?
Document Sharing: As numerous small firms come together as one in PEP, it is vital to have a centralized and easy-to-access space for document storage. Cloud-based collaboration platforms act as a centralized location to store and share documents. Users can access the updated versions of important documents, participant information, investment policies, and compliance documents.
Real-Time Collaboration: Gartner, in its recent report on digital transformation, suggests that by 2026, 75% of organizations will embrace a cloud-based collaboration platform as their primary means of communication. Retirement plan administration involves a lot of stakeholders.
Plan administrators, employers, service providers, and participants must collaborate on tasks, share information, and discuss important matters. A unified platform enables them to collaborate efficiently through chat, video conferencing, or virtual meetings. This facilitates efficient decision-making and eliminates delays caused by traditional communication methods.
Integration with Other Systems: Integrating retirement plan administration with the organization’s HR systems is crucial. It helps organizations have all their employee data, plan details, deductions, etc., in one place, which avoids manual data entry and the scope for human error.
Workflow Automation: The time taken to complete tasks is higher when paperwork and other retirement plan administration activities are done manually. There have also been several instances of lost employee data, incorrect entry, double entry, etc., which could affect the organization and the individual. When organizations move from old legacy systems and embrace cloud-based platforms for plan administration, they can automate the workflow.
Workflow automation can streamline administrative processes, such as onboarding new employers, managing contributions, generating reports, and tracking compliance activities. It can also reduce the need for human intervention in repetitive tasks and eliminate the scope for error.
Data Security: Cloud platforms provide secure data storage, ensuring that sensitive information related to the PEP is protected. Look for platforms with strong encryption standards, regular data backups, and robust access controls to maintain data privacy and compliance with regulations like the General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA).
Data-Driven Decisions: Cloud-based retirement plan administration systems eliminate the need for manual data processing. Most offer reporting and analytics, which help organizations make data-driven decisions on the plan efficiency, identify areas for improvement, and ensure compliance with regulatory requirements.
Conclusion: If you are a small business owner trying to find a PEP administration platform, consider factors such as security, scalability, ease of use, integration capabilities, and pricing. It’s also important to assess the platform’s compliance with industry standards and regulations and its track record for reliability and customer support.
