Key Takeaways
- PEPs reduce fiduciary risk and administrative burden
- Employers maintain limited but important responsibilities
- With proper due diligence and ongoing oversight, PEPs offer a streamlined, compliant way to deliver competitive retirement benefits
As employers look for efficient ways to offer retirement benefits, Pooled Employer Plans (PEPs) are gaining popularity. PEPs allow multiple unrelated employers to participate in a single retirement plan while shifting most fiduciary responsibilities to a Pooled Plan Provider (PPP). By joining a PEP, employers can significantly reduce their fiduciary burden, streamline plan management, and focus on a few manageable oversight tasks.
How Pooled Employer Plans Reduce Fiduciary Risk
A Pooled Employer Plan centralizes plan governance under a professional PPP, which acts as the named fiduciary and plan administrator. The SECURE Act of 2019 created PEPs to give employers access to lower-cost retirement solutions while simplifying fiduciary oversight. By participating in a PEP, employers benefit from:
- Professional fiduciary management: The PPP handles day-to-day plan administration, compliance, and investment oversight.
- Reduced liability exposure: Employers no longer make routine investment or administrative decisions, limiting potential fiduciary risk.
- Streamlined compliance and reporting: the PPP manages regulatory filing, participant disclosures, and plan documentation.
- Access to institutional investment pricing: PEPs provide professional investment management, helping participants pursue retirement goals efficiently.
This structure shifts most fiduciary duties away from the employer, allowing organizations to meet ERISA obligations with confidence.
Employer Responsibilities in a PEP
While PEPs reduce day-to-day plan oversight tasks, employers retain a focused set of responsibilities:
Selecting and monitoring the PEP provider
Employers must carefully choose a PPP and periodically review its performance. Best practices include:
- Evaluating the provider’s experience, compliance record, and fiduciary role
- Reviewing fees and service structures for transparency and reasonableness
- Documenting periodic oversight to ensure the provider continues to act in participants’ best interests
Oversight of investment and administrative functions
The PPP generally delegates investment management to professional fiduciaries, meaning employers are not responsible for making or managing investment decisions. However, employers are responsible for monitoring the PPP and ensuring its governance and oversight processes operate appropriately. Employers should:
- Confirm that delegated investment managers operate prudently and avoid conflicts of interest
- Review reports on investment performance, fees, and compliance
- Maintain adequate documentation to demonstrate ongoing oversight
Ensuring accurate payroll and participant data
Even in a PEP, employers remain responsible for submitting accurate employee data and contributions on time. Consistent processes prevent errors that could affect participants or trigger regulatory penalties.
Maximizing the Benefits of a PEP
Employers can maximize fiduciary protection by taking proactive, focused steps:
- Conduct thorough due diligence before selecting a PEP provider
- Define fiduciary roles clearly in plan documents
- Implement regular monitoring through reports and reviews
- Keep accurate records of contributions and participant information
These actions help employers fulfill their remaining fiduciary duties while relying on the PPP to manage the majority of plan responsibilities.
A Streamlined Retirement Plan Solution
Pooled Employer Plans help employers reduce administrative complexity while continuing to offer competitive retirement benefits. Boulay’s RetireNAV(k) PEP solution is designed to do just that—streamlining plan administration while delivering high-quality retirement benefits for employees.
Connect with us to see how RetireNAV(k) can simplify your retirement plan and provide meaningful value to your team.