The Industry Has Spoken: It’s Time to Embrace Pooled Employer Plans

Why It Matters

PEPs lower administrative and audit costs while shifting fiduciary risk, giving small‑ and mid‑size employers a competitive edge in talent attraction and regulatory compliance.

Key Takeaways

• PEP assets projected $21B by end‑2024.
• Over 50,000 employers have adopted PEPs.
• Recordkeepers cite PEPs as strategic priority (71%).
• Compliance costs can drop $15‑30K annually with PEPs.
• SECURE Act 2.0 heightens fiduciary appeal of PEPs.

Pulse Analysis

The surge in pooled employer plans reflects a broader industry response to rising fiduciary complexity and cost pressure. As the Department of Labor encourages multi‑employer solutions, providers are scaling technology platforms and investment menus to meet the demand from firms that lack in‑house expertise. This momentum is quantified by Cerulli’s data, which shows PEP assets climbing to $21 billion and plan counts more than tripling within three years, signaling a shift from niche experimentation to mainstream adoption.

At the heart of a PEP’s appeal is its three‑tier fiduciary structure. The 3(38) investment fiduciary assumes full investment responsibility, shielding sponsors from liability, while the recordkeeper delivers operational efficiency and economies of scale. The pooled plan provider (PPP) assumes the 3(16) administrative role, filing Form 5500 and overseeing compliance. Together, these roles reduce legal exposure and enable employers to offer robust retirement benefits without the overhead of a standalone plan, delivering annual savings of $15‑30 k for firms crossing the 100‑employee audit threshold.

SECURE Act 2.0, slated for 2025, intensifies reporting and audit obligations, making the PEP model even more attractive. Employers that adopt PEPs can position themselves as forward‑thinking benefits providers, enhancing recruitment and retention while mitigating regulatory risk. Advisors recommend a thorough evaluation of recordkeeper stability, PPP compliance history, and fee structures to ensure the chosen PEP aligns with corporate goals and employee expectations. Early adopters are already leveraging these plans to differentiate their benefits packages in a competitive talent market.