Smaller organizations often find it difficult to provide 401k plans to their employees due to the cost and complexity of administering a plan. Fortunately, Pooled Employer Plans (PEPs) are an option that can offer a more affordable and accessible way for employers of all sizes to offer retirement plans to their workers.

Pooled Employer Plans (PEPs) allow multiple employers to pool their resources to offer more effective retirement benefits for their employees. It was introduced as a new retirement plan option in December 2019 with the declaration of the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

PEPs are similar to traditional 401(k) plans, except they allow multiple employers to contribute into one large pooled account and share administrative costs across the group of employers.

In this article, we dive deep into the world of Pooled Employer Plans (PEPs). We will also unravel the benefits and challenges these plans may bring to recordkeepers and 401(k) retirement plan administrators.

What is a Pooled Employer Plan?

A Pooled Employer Plan (PEP) consists of multiple unrelated employers gathering into a singular retirement plan, pooling their assets managed by a Pooled Plan Provider (PPP). The PPP takes on the responsibility for plan administration, investments, and dealing with all ERISA fiduciary requirements, thereby reducing the administrative burden on individual employers. By joining a PEP, employers can access lower administrative fees and investment costs than they would by setting up an individual retirement plan.

Benefits of PEP Plans

PEPs bring along a myriad of benefits for employers and service providers, including:

  1. Cost-effectiveness: As PEPs pool together various employers, economies of scale come into play. It reduces overall costs for plan administration, investment, and other services associated with retirement plans.
  2. Simplified administration: The Pooled Plan Provider (PPP) handles administrative and fiduciary tasks. It relieves plan sponsors of these responsibilities.
  3. Reduced risk: All employers participating in a PEP transfer their fiduciary risk to the PPP. It safeguards their interests.
  4. Better investment options: With the pooling of assets, PEPs provide a wider variety of investment options. They may be accessible only to more extensive plans.

Disadvantages of PEP Plans

Despite their numerous benefits, PEPs do have some potential drawbacks:

  1. Less customization: PEPs may not offer the same degree of customization as individual employer 401(k) plans, hence being unable to cater to specific needs.
  2. Control: Employers lose control over some aspects of their plan to the PPP. They are unable to make decisions related to investment and plan design.

How PEP Impacts Recordkeepers and 401(k) Retirement Plan Administrators?

The introduction of PEPs is a game-changer for recordkeepers and administrators of retirement plans. Recordkeepers need to adapt their systems and procedures to accommodate this new plan, while administrators must keep pace with the evolving landscape.

  1. Role of Recordkeepers: Recordkeepers must adjust their systems to work with the pooled structure of PEPs. They must collaborate with PPPs to provide accurate plan information efficiently.
  2. Role of Retirement Plan Administrators: Retirement Plan Administrators should be prepared to guide clients on PEPs. They must be able to navigate plan transfers and exits and stay updated on PEP regulations and requirements.

How Must Recordkeepers and 401(k) Retirement Plan Administrators Prepare?

Recordkeepers and 401(k) Retirement Plan Administrators can address the PEP-related needs of their clients with the following simple steps:

  1. Stay informed: Keep up-to-date with any regulatory changes and industry best practices for PEPs to provide informed guidance to clients.
  2. Analyze client needs: Determine if a PEP is the right choice by analyzing client needs.
  1. Bolster partnerships: Strengthen relationships with PPPs, fund managers, and other service providers to maneuver the PEP landscape better.
  2. Develop systems: Update recordkeeping processes and systems to ensure they align with PEP requirements.
  3. Plan ahead: Prepare for any upcoming shifts in regulations and industry trends related to PEPs.


Pooled Employer Plans (PEPs) represent a new retirement plan option that allows employers across multiple industries and varying scales of business to offer retirement plans.

Plan sponsors benefit from pooled resources, cost savings, and administrative efficiency. Recordkeepers and 401(k) Retirement Plan Administrators face multiple challenges, such as the absence of clean data, multiple sources of inputs, varying file types and formats, and different reporting requirements. They should approach PEP plans thoughtfully by preparing their processes, upgrading their systems, and staying informed of changes in the PEP landscape.

Congruent’s CORE suite of solutions allows you to maintain and manage multiple PEP products. It is a modular cloud-based retirement plan administration software that addresses the challenges that come with PEP plans. Tools like CORE Census, CORE Eligibility & Enrollment, and CORE Contributions automate the contribution data collection process. It can accept multiple file types and formats and runs over 100 data validations for business.

Connect with us today to upgrade your existing platforms and make them PEP ready.

Back to Blog Home