Pooled Employer Plans

I have noticed that some plan administrators have been approaching employers about PEPs that they are planning to make available in time for the 2021 effective date. Does anyone have an idea of how flexible or inflexible the PEPs are likely to be regarding an employer’s preferences concerning eligibility, vesting, contribution formulas, loans, in- service distributions, etc.? None of the literature I have found on PEPs discusses this issue but flexibility in plan design would seem to be very important to an employer considering a move from a single employer VSP to a PEP.

Any ideas and/or guesses? Thanks.

DJ, my gut tells me there will be some pressure for flexibility and I haven't seen anything that would prohibit it.

However, one of the "advantages" of a PEP is supposed to be lower costs that will make it easier for small employers to start plans. I don't see where that's really going to happen. While there is a single 5500, the TPA still has to get census from and test each employer. The RK still has to track each employer and provide reports. The advisor still has to meet with each employer and, theoretically, have employee meetings for each employer.

The only place I see saving money is on the fund share class.

So, flexibility is an increased cost (or at least little difference) for the plans.

I'm still not sold on the advantages of a PEP.

Thanks, Bill. I agree with your assessment of PEPs but their proponents are starting to push them as a cost saving/ risk shifting measure.

Not all sales effort about a pooled-employer plan is a push; some is a defensive strategy of a service provider that fears losing business to those that offer the new thing.

Some employers are attracted—with zero expense savings, or even an expense increase—to a format under which someone else is the plan’s administrator.

Please understand I don’t advocate for or against anything.  I just describe some observations.