Private Pensions:

Changes Can Produce a Modest Increase in Use of Simplified Employee Pensions

HRD-92-119: Published: Jul 1, 1992. Publicly Released: Jul 1, 1992.

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Pursuant to a congressional request, GAO reviewed the use of simplified employee pensions, focusing on the: (1) extent to which small businesses sponsor those and other retirement plans; (2) reasons for low levels of plan sponsorship; and (3) likely effects of proposed legislative changes on plan sponsorship and worker coverage.

GAO found that: (1) the level of simplified employee pension sponsorship and employee participation is low; (2) low sponsorship and usage are related to cost, work-force, and operational differences between small and large businesses; (3) rigid participation, vesting, and small business requirements discourage sponsorship; and (4) retirement plan reform could simplify regulations and encourage sponsorship.