Transamerica Joins PEP-Alternative Market

The Transamerica Advantage Solution is being described by the firm as ‘a configurable retirement plan’ designed to be attractive to small employers.

Transamerica has announced the availability of a new packaged solution created for small companies seeking to start a new workplace retirement plan for their employees.

The program is called the Transamerica Advantage Solution and is being described by the firm as “a configurable retirement plan solution that combines all the technical expertise and participant services designed to operate a workplace retirement savings program efficiently.”

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According to the firm, small plan sponsors will work with their financial advisers to choose a service and investment menu that best fits their needs—reflecting the influence the retirement specialist adviser population has in the small-plan marketplace.

Darren Zino, senior managing director of U.S. retirement distribution at Transamerica, says the launch of the new solution shows the retirement industry is leaning into the needs of smaller employers that want a single employer plan “like never before.”

“The Transamerica Advantage Solution offers small employers the ability to choose from all the best features that we offer, along with attractive pricing,” he says, citing the fact that it offers employers their choice of third-party administration (TPA) provider, as well as the election of either 3(21) fiduciary investment advisory services or more comprehensive 3(38) fiduciary investment management services from an independent provider.

According to Transamerica’s announcement, plan sponsors also may choose as their default investment option a Transamerica target-date series based on asset class goals and objectives, with options including active, passive or blended underlying investment strategies.

The launch of the new small-market solution reflects broader shifts occurring in the defined contribution (DC) retirement plan market, which has recently seen the emergence of a new type of retirement plan called a pooled employer plan (PEP). Experts say PEPs offer attractive features for small employers that traditionally may have shied away from adopting 401(k)-style plans operated by single employers, whether because of the perceived expense or the perceived fiduciary risk that comes along with the provision of such plans.

Tim Werner, president of Ameritas BlueStar Retirement Services, a firm that has long been involved in the provision of multiple employer plans (MEPs) and is now delivering PEP services, says the early progress of the PEP marketplace has been encouraging. He says PEPs are indeed attractive to small employers, but they are also attractive to midsize and even large employers as well.

The emergence of PEPs, Werner and other experts say, is sparking the launch of small-employer-focused solutions such as the new one revealed this week by Transamerica. Multiple other firms have brought their own “PEP alternatives” to market over the past year, including OneAmerica, which in November launched OneConnect, a retirement plan solution that the company says will “ease administration for businesses and provide the scale that comes with a pooled or multiple employer approach, but with greater simplicity.”

Several months before that product launch, CAPTRUST Financial Advisors revealed a small-market service dubbed “Direct Fiduciary,” likewise billed as a comprehensive retirement plan outsourcing solution for small companies. The program, launched in collaboration with T. Rowe Price and National Benefit Services (NBS), seeks to deliver “better outcomes and lower costs for small business retirement plan clients that wish to maintain flexibility by operating an individual plan—as opposed to what may happen in a pooled employer plan or multiple employer plan.”

Within the service, CAPTRUST will provide 3(38) investment management, as well as participant investment advice, while NBS will act as the TPA, 3(16) plan administrator and primary contact for employers. T. Rowe Price is the recordkeeper and the day-to-day contact for plan participants.