PEPs, Outsourcing Can Reduce Plan Sponsors’ Fiduciary Risks, Survey Finds

The market for pooled employer plans has accelerated, as advisers now view PEPs more as tool for plan sponsors to manage fiduciary risk, rather than as a constraint on flexibility, according to a new survey from Pentegra Retirement Services.

The report, “Advisor Perspectives on Pooled Employer Plans,” based on a January survey of 45 advisers, found that more than 80% of respondents said fiduciary risk mitigation was the leading factor shaping their positive perception of PEPs, which first became available in 2021. While the standardization the pooled plans offer was once seen as a drawback, advisers now view it as a structural advantage that enhances defensibility in an increasingly litigious regulatory environment, according to the report.

“Advisers do not see PEPs as eliminating fiduciary responsibility, but rather professionalizing and reallocating it to institutions better equipped to manage it,” wrote Carlo Guerrera, Pentegra’s vice president of sales and key accounts, in an emailed response to questions from PLANSPONSOR’s sister publication PLANADVISER.

The Pentegra report stated, “Advisors increasingly view PEPs not as a product innovation, but as a structural response to rising complexity in retirement plan management.” 

Among advisers working with plan sponsors that participate in PEPs or use Employee Retirement Income Security Act 3(16) fiduciary services, 75% reported measurable improvements in overall plan quality. Half said plan quality improved significantly following adoption, while an additional 25% saw moderate improvement. No respondents reported a decline in plan quality, and the remaining 25% said there was no noticeable change.

The survey showed that PEPs mitigated risk for plan sponsors and advisers in different ways, according to Guerrera.

“For plan sponsors … by outsourcing administrative and fiduciary functions to a pooled plan provider, employers reduce their exposure to compliance failures, operational errors and governance gaps—particularly if they lack internal retirement plan resources and expertise,” Guerrera wrote. “For advisers … respondents noted that working within a PEP structure enhances documentation, clarifies roles and aligns oversight with institutional processes—all of which are critical in a more scrutinized and litigious environment.”

Survey results also showed unanimous support among advisers for an integrated fiduciary model. All respondents said that having a single, integrated fiduciary partner combining 3(16) fiduciary services, pooled plan provider responsibilities and compliance expertise was either very important (71%) or extremely important (29%) to their practice.

This preference mirrors how employers have long approached health benefits management, according to 2025 analysis by global advisory firm WTW. Employers routinely have outsourced complex administrative and compliance functions to insurance carriers, pharmacy benefit managers and third-party administrators, which allowed them to focus on their core businesses while mitigating risk. This comes even as provisions of the Consolidated Appropriations acts of 2021 and 2026 have increased concerns about fiduciary risks related to health benefit pricing.

According to WTW’s analysis, PEPs allow employers to delegate most day‑to‑day plan management functions—including annual audits, hardship and loan approvals—and participant communications, streamlining operations while maintaining strong governance.

PEPs further simplify retirement plan compliance by shifting responsibility for requirements under ERISA, and from the Internal Revenue Service, the Department of Labor and new legislative requirements to the pooled plan provider, which manages testing, audits and regulatory filings on behalf of participating employers.

“PEPs are no longer being evaluated solely as a product innovation—they are being recognized as a structural solution to the realities of today’s retirement plan environment,” Guerrera wrote. “Advisers are prioritizing consistency, defensibility and professionalized fiduciary oversight, and PEPs are uniquely positioned to deliver on those expectations.”

Pentegra reported, “As regulatory expectations increase and plan sponsors continue to face resource constraints, advisors are gravitating toward PEP models that emphasize strong governance, integrated fiduciary oversight, and operational rigor. Ultimately, the findings suggest that PEPs are evolving from an emerging alternative into a core component of modern retirement plan strategy.”

The Pentegra 2026 Advisor Study on Attitudes Toward PEPs was conducted from January 2 through January 29 and included responses from 45 financial advisers in the U.S.