Tuesday, October 9, 2012

Compliance or Policy?

This is going to be a fairly short post, I think. I want to talk a bit about what should be the greater influence on benefit program design -- compliance or policy?

Right now, and especially as PPACA (health care reform or ObamaCare, if you prefer) is starting to exert its influence, it seems that most benefit program design is structured to facilitate compliance with the myriad of laws that Congress has passed since ERISA was signed 38 years ago. Just think, you provide a big health care benefit, you pay a Cadillac Tax. Your NHCEs can't afford to defer to your 401(k), your HCEs don't get to benefit. You would like to provide your employees with retirement income, but you cannot stand the volatility in corporate cash flow and P&L of a defined benefit plan.

Seems wrong, doesn't it?

So, even to the extent that you have a policy that is governed by things like true long-term cost and what is right for your employees and your business, you are unable to implement that policy while being in compliance.

Seems wrong, doesn't it?

Of course, it's wrong, but the people who make the laws don't seem to get it. They don't believe in benefits policy. They don't believe in retirement policy. They believe in tax policy and gerrymandering the tax code to make it work, often at the expense of corporations (large and small) and their employees.

Seems wrong, doesn't it?

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