PEPs, or pooled employer plans, have received attention as a potential game-changer in the retirement plan industry. However, their adoption has been slower than expected, with many taking a cautious approach. While 350 PEPs have been filed, employers are still evaluating the benefits. PEPs offer advantages such as outsourcing fiduciary duties and reducing costs and administrative work. However, costs depend on program design and achieving scale. Smaller plans may face legal risks as they grow.
Independence of the pooled plan provider is a key consideration, with employers often preferring separate providers. MassMutual recently introduced an exclusive PEP in partnership with Alerus and Access Retirement, targeting the small startup market. The uptake of state plans and auto IRAs has been modest, but tax credits in SECURE 2.0 may drive growth. PEPs are seen as a logical solution for wealth advisors and registered plan administrators, but effective design and execution are essential. MassMutual’s PEP program serves as a promising example for other distributors.
For more on this story, read Fred Barstein’s most recent article on www.wealthmanagement.com.
