Fact-Checking the Top 5 Myths About PEPs

Pooled Employer Plans offer many of the benefits of traditional single-employer retirement programs. Yet some employers may be holding on to outdated or wrong information — and potentially missing out on significant benefits.

We’ve fact-checked five of the most common myths to help you debunk them during your next client meeting.

Myth No. 1: PEPs are only for small plans.

Fact: Plans of all sizes can benefit from a PEP. By pooling assets with other employers, even large plans can benefit from lower investment fees, reduced recordkeeping costs and more competitive pricing on plan services. Employers are also finding value in outsourcing tasks, like Form 5500 filings, and freeing up their internal resources. Our recent research shows what PEP employers appreciate the most is simplified and streamlined plan management.

PEPs are not one size fits all. In the current climate, you can find options specifically designed for plans ranging from micro to mega. Take a close look at what a pooled plan provider can offer to match your clients with the right options.

Myth No. 2: PEPs are too new to be trusted.

Fact: While the SECURE Act of 2019 formally introduced PEPs, the concept is rooted in multiple employer plans — and these have existed for decades. Many pooled plan providers, such as The Standard, have decades of experience in retirement plan administration.

In a recent survey of our own PEP customers, a comment from one HR decision-maker supports this fact: “Implementing a PEP...is a great way to offer quality employee benefit plans, provided your provider is a quality service provider.”*

Myth No. 3: PEPs lack design flexibility.

Fact: Each employer within a PEP has unique retirement plan goals. Working with a provider that has a consultative approach, employers have significant flexibility — as well as the choice of many administrative services. This flexibility allows them to design a plan that best aligns with their needs and objectives, and drives better outcomes for employees.

Myth No. 4: Employers give up control of their plan with a PEP.

Fact: Many PEPs allow employers to retain control over key elements, depending on the provider and plan structure. With a PEP, employers typically have control over a number of plan design features, such as defining matching levels and contribution limits, and ensuring the plan is performing to meet the employees’ needs.

Myth No. 5: PEPs deliver a reduced participant experience.

Fact: PEPs are designed to deliver a participant experience that equals — or exceeds — that of a traditional single-employer plan. With a PEP, employees have access to leading recordkeeping platforms with appealing features. These may include easy-to-use portals, robust investment options and financial wellness tools.

Many participants in our PEP customer survey commented on an improved experience for their employees.* Here’s a comment from one HR decision-maker:

“It is important to us as a company that employees understand their benefits and the opportunities that the retirement plan offers to them. Having a PEP helps provide guidance and support to our employees.”

Master the myths and facts for your next client discussion about PEPs. Here are two more ways to help you prepare:

• Get a refresher about the benefits of PEPs for employers and for you.
• Check out the results of recent research about PEPs. (Spoiler alert: It showed a 26% rise in plan satisfaction after joining a PEP.)