The U.S. Department of Labor unveiled its final rule on Monday to expand the creation and use of open multiple employer plans (MEPs) designed to encourage workplace retirement savings.

The new rule allows firms or associations to band together to offer employees a defined-contribution plan as long as participating organizations have geography or a similar industry in common.

Advisors are expected to leverage these retirement plans to reduce cost, administration and fiduciary liability for clients, and eventually may even use them as a branding opportunity.

"Many small businesses would like to offer retirement benefits to their employees, but are discouraged by the cost and complexity of running their own plans," Patrick Pizzella, acting secretary of labor, said in a news release.

"Association retirement plans offer valuable retirement security to small businesses' employees through their retirement years,” he added.

Some 66% of small business owners who do not offer a retirement plan are likely to consider an open MEP, according to a recent survey by Empower Retirement, a Denver-based firm that administers $635 billion in retirement plan assets for more than 9.2 million plan participants.

As important to advisors, 50% of business owners said they’d seek help from a financial professional when opening an open MEP, the survey found.

Small business owners’ interests in open MEPs are “piqued” over potentially lowering costs to their organizations and fees to employees in a workplace retirement plan offering, Empower President Edmund Murphy III said.

“Broadening terms to allow even more small businesses the opportunity to offer workplace retirement plans potentially puts more employees on a path to building their retirement savings,” he said.

At small businesses in the U.S. with fewer than 100 employees, less than half of workers have access to a defined contribution retirement plan, Murphy added. 

Almost all of the business owners Empower Retirement surveyed said the biggest advantage in offering their employees a retirement plan is “it’s the right thing to do.” Additionally, 59% of employers cited employee retention and attracting talent as leading factors.

However, among the top reasons why small businesses don’t offer a retirement plan to employees is because their company is too small, survey respondents said.

High costs and lack of administrative capacity are the top two reasons employers cited for not offering a retirement plan to workers, according to research by the Pew Charitable Trusts.

The DOL said it expects the new open MEP rule to allow small businesses to overcome those hurdles for the following reasons:

• It will reduce costs for items such as investment management and record keeping which will flow from the pooling of assets.

• It will provide simpler and less-expensive plan administration, since employers wouldn't need to undergo individual 401(k) audits or file their own IRS forms for the plan.

• It will reduce fiduciary liability, since the employer would no longer technically be "sponsoring" the retirement plan.

The rule goes into effect September 30.