Empower's Cancer Society Contract: A Game Changer for Nonprofit Retirement Plans

In a notable development for nonprofit retirement plan administration, Empower, a subsidiary of Great-West Lifeco, has been awarded the contract to manage the American Cancer Society's retirement plans. This partnership, which commenced on May 1, 2026, is significant not only for the prominence of the American Cancer Society (ACS)—one of the most recognized nonprofit organizations in the United States—but also for the broader implications it holds for the nonprofit sector and the benefits brokers who serve them. With approximately 7,000 employees and $475 million in assets under management, the ACS's decision to partner with Empower represents a shift towards integrated retirement solutions that may reshape how nonprofits approach their benefits programs.

Empower's entry into the nonprofit space is particularly noteworthy given the complexity of retirement plans that many tax-exempt organizations contend with. The ACS's retirement offerings, which include a 403(b) plan, a 401(k) defined contribution plan, and 457(b) and 457(f) nonqualified deferred compensation plans, exemplify the layered structure that requires adept management. This article will delve into the implications of this partnership, the evolving landscape of nonprofit retirement plans, and what it means for benefits brokers navigating this market.

The Landscape of Nonprofit Retirement Plans

Retirement planning in the nonprofit sector is characterized by its unique regulatory environment and the distinct needs of its workforce. Unlike their for-profit counterparts, nonprofit organizations often utilize 403(b) plans, which are specifically designed for tax-exempt organizations, and 457 plans that cater to high-earning employees, providing them with additional ways to save for retirement beyond standard contribution limits.

Understanding 403(b) and 457 Plans

The 403(b) plan is similar to a 401(k) plan but is tailored for public schools and certain tax-exempt organizations. Employees can defer a portion of their income into retirement savings, which grows tax-deferred until withdrawal. However, the structure of these plans often results in higher fees compared to 401(k) plans, a concern that has been raised by industry leaders advocating for more equitable treatment of nonprofit employees.

The 457(b) plan allows high-earning nonprofit employees to defer additional compensation beyond their 403(b) limits, providing a crucial avenue for wealth accumulation. The 457(f) plan, on the other hand, is designed to retain key executives by deferring compensation until specific conditions are met, adding another layer of complexity to plan administration.

Empower's Strategic Shift in the Market

Empower's aggressive expansion into the nonprofit sector comes at a time when the company is already managing over $2 trillion in assets and serving more than 20 million individuals across various retirement plans. The company's strategy is indicative of a broader trend towards consolidation within the retirement plan administration industry, where integrated solutions are becoming increasingly attractive to nonprofits that manage multiple plan types.

The Impact of Consolidation

Consolidation in the retirement plan space allows nonprofits to streamline their administrative processes, potentially reducing overall costs. Empower's recent acquisition of Milliman's retirement and benefits administration business for $340 million further enhances its capacity to offer a comprehensive suite of services that includes health and welfare administration alongside traditional retirement plans.

This integrated approach may simplify the decision-making process for nonprofit organizations. Instead of juggling multiple providers for various plan types, nonprofits can consolidate their administration under a single provider like Empower, which could lead to cost savings and improved efficiencies. However, this shift also raises questions about fiduciary responsibilities and the potential risks associated with placing all plan management in one entity's hands.

Considerations for Nonprofit Benefits Brokers

For benefits brokers who serve the nonprofit sector, the implications of Empower's partnership with the ACS are multifaceted. Brokers must now navigate a landscape where large nonprofits may increasingly consider integrated platforms for their retirement and benefits administration needs.

Evaluating Trade-offs

When presenting options to nonprofit clients, brokers face the challenge of weighing the benefits of a single-platform solution against the potential downsides. Key considerations include:

• Cost Savings: Brokers should analyze whether the fee reductions associated with consolidated administration outweigh the risks of losing the ability to select best-in-class providers for each plan type.
• Fiduciary Responsibility: Consolidating plan management with one provider can simplify oversight but may also increase risk. Brokers must help clients assess whether this trade-off aligns with their governance structures.
• Complexity of Plans: Nonprofits often have unique plan structures that require specialized management. Brokers should ensure that integrated solutions can adequately address these complexities.

Ultimately, brokers must remain informed about the evolving dynamics within the retirement plan space to provide the best guidance to their nonprofit clients.

The Significance of Brand Alignment

The partnership between Empower and the American Cancer Society is not only a testament to Empower's capabilities but also carries significant market implications regarding brand alignment. The ACS is a well-respected organization known for its commitment to cancer research and patient support, making it an influential player in the nonprofit sector.

Market Signals

Other nonprofits will undoubtedly take note of this contract, which serves as a signal that Empower is a viable and reputable option for retirement plan administration. As nonprofits seek providers that align with their values and mission, having a high-profile client like the ACS can enhance Empower's credibility in the competitive landscape of retirement services.

As more nonprofits recognize the benefits of integrated retirement solutions, Empower's strategy could lead to a transformative shift in how these organizations manage their employee benefits. Brokers who adapt to this trend will be well-positioned to offer valuable insights and solutions to their clients.

Key Takeaways

• Empower's contract with the American Cancer Society marks a significant move into the nonprofit retirement plan market.
• The partnership highlights the complexities of managing multiple retirement plans within tax-exempt organizations.
• Brokers must weigh the benefits and risks of consolidated administration when advising nonprofit clients.
• Brand alignment with respected nonprofits can enhance a provider's market credibility.
• The trend towards integrated retirement solutions is likely to reshape the nonprofit benefits landscape.

Frequently Asked Questions

What are the key differences between 403(b) and 401(k) plans?

The primary difference between 403(b) and 401(k) plans lies in the type of organizations that offer them. 403(b) plans are available to employees of tax-exempt organizations and public schools, while 401(k) plans are typically offered by for-profit companies. Additionally, the regulatory frameworks governing these plans differ, with 403(b) plans often incurring higher fees compared to their 401(k) counterparts.

How does the 457(b) plan benefit high-earning nonprofit employees?

The 457(b) plan allows high-earning employees of nonprofits to defer additional income beyond the contribution limits set for 403(b) or 401(k) plans. This additional deferral can significantly enhance retirement savings, allowing employees to accumulate a more substantial nest egg for retirement.

What implications does Empower's acquisition of Milliman have for the nonprofit sector?

Empower's acquisition of Milliman's retirement and benefits administration business expands its capabilities, allowing it to offer a wider array of services, including health and welfare administration. This positions Empower to better serve complex nonprofit organizations that require integrated solutions for their retirement and benefits plans.

What factors should nonprofits consider when selecting a retirement plan provider?

When selecting a retirement plan provider, nonprofits should consider factors such as cost, the provider's experience with tax-exempt organizations, the range of services offered, and the ability to manage complex plan structures. Additionally, nonprofits should evaluate the provider's alignment with their mission and values, as this can enhance brand credibility and employee trust.