Press Release

Lockton Launches Retirement Outsourcing Practice

Issued by Lockton

Aug. 20, 2020

Kansas City, MO, August 20, 2020 – Leveraging new opportunities created by the recently passed SECURE Act, Lockton has launched a new practice designed to help employers reduce the risk, effort, and expense of sponsoring retirement plan benefits. Based in the northeast and co-founded by advisors Tom Clark, JD, and Mike Duckett, the new Outsourced Administrative Responsibilities (OAR) practice will make Pooled Employer Plans (PEPs) the first order of business. Lockton will launch a series of PEPs, initially in the northeast and then nationally, over the next several months.

Introduced under the SECURE Act, Pooled Employer Plans (PEPs) allow unrelated employers to band together to offer employees a single retirement plan. Previously the employers had to be in some way related. The new law allows them to meet a looser standard of requirements, such as having the same Pooled Plan Provider (PPP). Employers who pool plans can outsource many fiduciary and administrative obligations to expert third parties and take advantage of their collective purchasing power to often obtain lower fees and better services. PEPs are limited to 401(k) plans and the legislation will be effective January 1, 2021.

“Lockton’s philosophy for delivering retirement advice has always been based not only on objectivity, but also maximizing the market’s potential. To do that, we must constantly innovate. OAR was specifically designed to leverage the marketplace inflection point the SECURE Act created. That’s why we’re designing multiple PEP solutions. It’s a very strategic decision to maintain our objectivity and it’s a recognition that clients need more than a one-size-fits-all solution,” says Pam Popp, President of Lockton Retirement Services.

PEPs are often considered small plan solutions, but Lockton engaged industry-leading service providers, including Principal® and Transamerica, to develop a shared vision for the larger market. Together they developed PEPs with flexible designs that allow even the most complex plans and organizational structures to benefit from the SECURE Act.

“Lockton believes that those who interact most directly with clients are best positioned to drive innovation,” says Bob Connolly, CEO of Lockton’s northeast series. “That’s why we charged Tom and Mike with gathering marketplace intelligence and partnering with industry leading recordkeepers and asset managers to build a program that will set the standard PEP offerings.”

“The new rules create huge opportunities for retirement plan sponsors,” says Sam Henson, Director of Legislative Affairs for Lockton Retirement Services. ”Before, these programs were limited to affiliated organizations. Now any employer can pool their plan’s assets with other employers. The benefits are significant, including streamlined administration, reduced compliance and fiduciary risk, and greater plan negotiation leverage. The biggest advantage for companies dealing with COVID-related business challenges is the opportunity to provide best-in-class retirement benefits and shift the majority of fiduciary responsibilities to industry experts.”

“Many anticipate that traditional multiple employer plan providers will simply retool old, small market offerings with a ‘PEP’ label,” says Duckett. “Our approach begins with solving for our clients’ business needs. We’re leveraging opportunities created by the SECURE Act to enhance plan design flexibility and increase clients’ ability to outsource administrative complexity.”

In addition to outsourcing, PEPs allow employers to benefit from scale. According to Clark, this includes not only the scale of the employers’ combined plan assets, but also the scale of the associated advisor’s book of business.

“Objectivity is so foundational to what we do that, when building our multiple PEP options, we refused to sacrifice flexibility or best in class asset management just to achieve better pricing,” says Clark. “Instead, we leveraged Lockton’s negotiating strength. Where others create savings by consolidating assets to achieve $50 million or so of purchasing power, the clients attracted to a Lockton-built PEP can achieve the scale generated by more than $1 billion.”

PEPs are not a single-provider offering. They must be constructed through partnerships of several entities including administrators, asset managers, and advisors.

“Finding the right providers is key to making the programs successful,” says Clark. “Plan sponsors need an administrative provider who can handle multi-plan employer complexities and deliver plan design flexibility that meets unique requirements. We think having a network of providers will make Lockton’s approach unique in the market and much more responsive to our clients’ needs.”

“Principal has been a leader in promoting retirement policy, advocating for PEPs and the benefit they provide,” said Jerry Patterson, senior vice president of retirement and income solutions at Principal®. “We’re thrilled to collaborate with Lockton to bring an innovative PEP solution to the market.”

“The energy Tom and Mike brought to our team in the development of every single detail of our PEP program is uncommon. It gives us great confidence in how it will be received in the marketplace,” adds Kent Callahan, CEO Workplace Solutions Division at TransAmerica.

“Clients turn to and trust Lockton to help them solve complicated issues on insurance, benefits, and retirement. Our specific clients in the northeast tend to have complicated plan design rules as a result of their contracting requirements, and many have unique needs as it relates to ownership groups, M&A, and compliance testing. OAR will help our middle market clients to solve these important issues, while also outsourcing their fiduciary and administrative responsibilities and risks,” says Connolly.

Lockton’s retirement practice advises more than 1,200 clients, representing $70 billion in assets.

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