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Benefits February 2, 2026
Strength in Numbers: Plan Sponsors Increasingly Open to Joining PEPs, MEPs
Designed to help close the retirement plan coverage gap, the pooled options are drawing interest even from midsize and large employers.
Reported by Beth Braverman
Art by Simone Virgini
With an eye on costs and ongoing concerns about fiduciary risk and the administrative burden of sponsoring retirement plans, employers are increasingly turning to multiple employer plans and pooled employer plans to provide comprehensive and cost-effective options for their employees.
The plans allow a group of companies to join a single retirement plan, outsourcing its administration and giving companies with fewer employees access to economies of scale. Fully two-thirds of employers surveyed by Mercer late last year indicated that they are considering switching to a MEP or PEP or may do so in the future. Separately, 29% said they are currently using or considering a MEP or a PEP, specifically to lower plan costs.
“MEPs and PEPs are another arrow in the retirement plan solutions quiver,” says David Levine, an Employee Retirement Income Security Act attorney with Groom Law Group. “They have been growing, and they continue to grow.”
While such plans are gaining prominence in the marketplace, they are not brand new. MEPs date back to the Taft-Hartley Act of 1947, but they were relatively underutilized due to regulatory hurdles. To join MEPs, companies need to share a common nexus, such as belonging to the same industry or trade group. The plans also carried risks, since each plan sponsor still retained fiduciary duty for the plan, and a compliance failure by any single employer would disqualify the entire plan.
The Setting Every Community Up for Retirement Enhancement Act of 2019 addressed many of these concerns by creating PEPs, a subgroup of MEPs. PEPs, which first started coming to market in 2021, are more appealing to businesses because they will have a designated pooled plan provider that acts as the plan sponsor and 402(a) fiduciary, taking on major responsibilities such as plan administration and auditing. Unlike traditional MEPs, PEPs have no requirement that participating employers share a commonality, meaning unrelated businesses can join together in a single plan.
Interest From Plans of All Sizes
Congress initially created PEPs to help close the retirement coverage gap that has long disadvantaged smaller employers, but midsize businesses have also shown interest in joining plans that can offer cost-effective benefits, as well as relief from administrative complexity and most fiduciary responsibility.
“A lot of plan sponsors are realizing they don’t have the time, knowledge or inclination to want to take care of these responsibilities,” says Jeff Atwell, who oversees the FiduciaryxChange business as senior vice president of fiduciary services at AmericanTCS Fiduciary Services. “They’re trying to run their business, so they’re looking for ways to outsource that to a professional, a third party.”
Adoption of PEPs was initially slow due to unfamiliarity and their launch amid the uncertainty of the COVID-19 pandemic. But the SECURE 2.0 Act of 2022 made PEPs even more attractive by allowing 403(b) plans to join a PEP and by making automatic enrollment an option for eligible employees from companies using PEPs. Five years after their initial introduction, PEPs are gaining traction.
The PEP market surpassed $20 billion in assets in 2024, up from less than $6 billion in 2022, according to new data from Cerulli Associates. The research also shows that more than 50,000 employers were participating in 339 PEPs in 2024. The share of active and retired participants with a balance increased 49% year-over-year.
Research released in April 2025 by The Standard found that more than 80% of employers were satisfied with the PEP experience, with 26% reporting an increase in satisfaction after joining the PEP. Respondents point to easier plan management and lower costs as the primary drivers of higher satisfaction.
The Role of Advisers
The trend has also benefited from state laws requiring small businesses to offer retirement plans and from increased adviser awareness and comfort in recommending them. The Standard survey found that nearly six in 10 employers considered a PEP because their adviser or consultant recommended it.
“Advisers play a critical role in this process with plan sponsors, because we can help employers evaluate whether a PEP or a stand-alone plan is the best fit for their goals,” says Michelle Cannan, managing director and head of company retirement plan services at Modern Wealth Management. “We can help with conversion, implementation and ongoing monitoring.”
As awareness and adoption of PEPs grow, experts say plan sponsors should recognize that while they are able to outsource liability, they always have some fiduciary responsibility.
“The adopting employers are still responsible for a degree of monitoring, due diligence and running a prudent process to determine whether this is the right decision that meets the needs of their plan, their participants and so on, just as they would with any other big decision related to recordkeepers or target-date funds,” says Chris Bailey, a director in Cerulli’s retirement practice.
In response to growing interest in PEPs, a wide range of players has entered the PEP ecosystem, each with a different approach. Third-party administrators, professional employer organizations, recordkeepers and consulting firms are all now offering or supporting PEPs.
Congress originally designed PEPs to close a gap in retirement plan coverage, boosting offerings available to small businesses and giving them access to economies of scale. But midsize and large companies have also shown interest in PEPs, particularly those offered by large consultancies, seeing them as a way to offload risk and reduce the cost of audit compliance.
“It is helping expand access, but it has also created a secondary market, where you have this fiduciary and administrative outsourcing, along with being able to use the scale and deliver a high-quality investment platform,” says Preston Traverse, a partner in and defined contribution mid-market solutions leader at retirement consultant Mercer. “It’s allowing plans at different sizes for different reasons to be able to choose.”
