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Collins, Hickenlooper Introduce Bill to Cut Red Tape for Small Business Employee Retirement Plans

Washington, D.C. – U.S. Senators John Hickenlooper (D-CO) and Susan Collins (R-ME) introduced the Simplifying Small Business Retirement Savings Act, a bipartisan bill to make it easier for small businesses to access and offer retirement plans for their employees.


Small businesses employ nearly half of American private sector workers. However, due to costs and regulatory complexity, only 53 percent of workers at small businesses have access to a retirement plan compared to 85 percent of employees at larger companies.


“Making it easier and more affordable for smaller businesses to offer retirement plans is key to helping many Americans prepare for their golden years,” said Senator Collins. “In 2019, legislation I co-authored to reduce the cost and complexity of retirement plans was signed into law, expanding employees’ access to these savings options. By building on this effort, our bipartisan bill would make a significant difference in helping individuals save more for retirement.”


“Small businesses don’t have the resources of big companies, yet we treat them the same when it comes to retirement plans,” said Senator Hickenlooper. “Cutting this red tape will make it easier for employees to save for retirement and help level the playing field for local businesses.”


Specifically, the Senators’ Simplifying Small Business Retirement Savings Act would modify two innovative types of retirement plans that are designed to make it easier and more affordable for small businesses to provide retirement plans:


  • Modify Pooled Employer Plans: Pooled Employer Plans, originally created by a provision authored by Senator Collins, allow small businesses to pool their resources and purchase plans as if they were a single large company.


    • Typically, companies offering retirement plans will pick between trustees of varying responsibility levels to manage plan assets based on what works best for each situation. However, Pooled Employer Plans inadvertently restrict providers to using one type of trustee, discretionary trustees.


      • This has limited the number of Pooled Employer Plans offered to small businesses.
      • The Simplifying Small Business Retirement Savings Act would allow companies administering Pooled Employer Plans to have the option of using directed trustees, an industry standard for large companies, as well as discretionary trustees.
      • The new option would expand the marketplace for Pooled Employer Plans, giving small businesses more choices at lower costs.


  • Simplify IRS Filing for Small Business Retirement Plans: Group of Plans allow small businesses to combine their resources while retaining more independence. Generally, businesses with up to 100 employees are subject to simplified IRS compliance requirements for their retirement plans.


    • However, when participating in a Group of Plans, the retirement plan administrator is required to follow the filing process for larger companies, since the number of employees among the pooled small business surpasses 100.
    • The Simplifying Small Business Retirement Savings Act would apply the same simplified process to any retirement plan pool that is made up of small businesses with up to 100 employees.




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