A Network of Retirement Plans

The term “networking” is exploding everywhere and between so many things.

You can’t turn around without either witnessing, being part of, or suggesting that some form of networking is taking place. And for a long time, we used the term “connecting” as a synonym. We then moved to the word “relationship” in order to humanize the process. I always felt this was a better term and involved the subtle invitation to friendship.

One of the ways that the idea of networks rises to the top of the conversation scale is within the medical insurance world. “What group or network or you a part of?” is a common question as we each try to figure out what is the best medical “deal” in our part of the country. “In Network” or “Out of Network” becomes understood as referring to a service or procedure that is either going to be covered by insurance or not. All too often not!

Congress is now wrestling with finding new ways to increase health services and lower costs simultaneously. Although that thought seems counter intuitive, it’s not. One of the options they are considering is to allow medical networks to extend across state lines. This seems to be a low hanging fruit alternative. Simply put, if you can get more healthy people in a plan it will cost less. We all know that the healthy pay for the physically challenged. Such is the nature of insurance.

So what about other benefit areas like retirement?

A few years ago a friend did a little research and he discovered that there really is no such idea within the retirement plan space. Except for the large church denominational plan, there is no “insurance” for the little guy.

Shining a searchlight on the subject, we know that Unions have had both defined benefit pension plans and some version of a defined contribution plan for years. The development of the Non-Profit 403b Plans including 403(b)(9) Church plans, then the IRA and then the 401(K) provided emphasis to the “saving/investing for the future” movement.

Unfortunately, there are still many small non-profits, corporations, and small organizations that do not provide even these options for their employees. A recent movement to set up statewide savings plans seems to have stalled permanently. Even programs such as SEP IRAs and Simple 401k Plans have not filled the void. One of the reasons given is that it still leaves the organization to set up and manage the plan.

I believe there is also the fear of not knowing how to select a good cost effective plan and then approve a cost effective investment menu are also barriers.

Here is at least a partial list of what is needed to set up a good plan. If we can accomplish that for multiple entities, perhaps we can then set up a multi-employer plan for small churches and non-profits that will eliminate, or at least reduce the cost as well as administrative barriers, while serving the long-term retirement needs of their employees and staff. Remember, each one may have as much as 30 years “in retirement." Or, from a Christian perspective, time to continue “building the kingdom."

Keys to a multi-employer retirement plan:

1.     Legal documentation coupled with an inclusive plan design. One that is good for a wide range of people.

2.     A designed, vetted, and monitored investment menu set up for a wide range of participants with differing amounts of investment knowledge and sophistication.

3.     A cost-effective delivery system that is not geographically limited.

4.     A Retirement Plan Oversight Committee to keep an eye on the plan and direct the educational activities needed to make it effective.

5.     A great online education system.

6.     An inspirational message that will encourage savings and preparation for that 30 years of retirement.

It will take a capable vendor like Envoy Financial, plus 3-5 key church leaders and/or ministry leaders to embrace the vision, put the pieces in place, and launch the project.

It is obvious to all ministry leaders that ducking the question of retirement preparation is like shooting yourself in the foot. It hurts and you can’t go anywhere.

The reality of those 30 years I’ve mentioned above are upon us. Here is one more way that the universal, or expanded church, can work together, be good financial stewards, and promote the growth of God’s kingdom here on earth.

Here is the definition of a Network: a group of organizations that are closely connected and that work with each other

Pretty simple really if the pieces are put together properly.

I would appreciate your thoughts as we grapple with real life issues together.

Bruce