Pooled Employer Plans (PEPs) offer small to mid-sized employers a streamlined way to manage retirement benefits by joining a larger, shared plan overseen by a third party. The concept is straightforward: reduce administrative burden, lower fiduciary risk, access better pricing through scale, and simplify plan oversight.
Some experts believe PEPs could eventually meet the needs of up to 80% of employers. Yet, despite these advantages, adoption has been slower than expected.
Why? Awareness is still low among many plan sponsors, and some advisors are unsure how to integrate PEPs into their practice. Others worry about losing plan customization—though for smaller employers, the trade-off may be worth the simplicity and risk reduction.
Still, momentum is building. PEPs are gaining traction among smaller banks, RIAs, CPAs, and broker-dealers eager to streamline retirement services. Their adoption trajectory has been compared to that of cloud computing: slow at first, but ultimately transformative.
The takeaway? PEPs might not revolutionize the 401(k) landscape overnight, but they’re steadily shaping its future. Advisors with a long runway ahead may want to start leaning in—both to stay competitive and to offer smarter, scalable solutions to clients.
Want more insights? Read Fred Barstein’s full column: “Will Pooled Employer Plans Transform the 401(k) Industry?“
