For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.
Opinions February 6, 2026
What a PEP Changes—and What It Doesn’t—for Employers
The Standard’s assistant vice president of retirement plan sales explains an employer’s responsibilities when joining a pooled employer plan.
Reported by Steve Chappell
Art by Simone Virgini
Pooled employer plans (PEPs) are gaining momentum for a simple reason: They make running a retirement plan easier. With more than $18 billion in assets and more than 41,000 participating employers, according to the 2025 PLANSPONSOR Recordkeeping Survey, PEPs are quickly becoming a practical solution for organizations looking to simplify plan management, reduce risk and save on costs.
At their core, PEPs are designed to ease an employer’s workload. By shifting many administrative and fiduciary duties to a pooled plan provider (PPP), employers can spend less time managing plan mechanics and more time focusing on their business and employees.
That said, a PEP does not eliminate employer responsibility entirely—which is not necessarily a drawback. Instead, it creates a clearer, more efficient division of responsibilities that often offers employers greater peace of mind.
Why This Matters for Employers
For employers considering a change to their retirement plan, the central question is not whether a PEP removes all responsibility; it is if a specific PEP’s structure makes meeting their fiduciary responsibilities easier.
Steve Chappell
Employers that have adopted PEPs often say the biggest benefit is not cost savings alone, but time. In fact, according to The Standard research conducted in January 2025, an average of two out of three employers reported that after joining a PEP, they had more time to contribute in more meaningful ways to their organization’s success. That time savings shows up across plan operations, governance and compliance—especially for plans that require audits.
Instead of juggling multiple vendors, deadlines and regulatory requirements, employers gain a streamlined structure with built-in professional oversight. The result is often less stress, fewer surprises and more confidence that the plan is being handled appropriately.
Less Paperwork, Not Less Accountability
PEPs are often considered a way to “outsource” retirement plan administration. That is largely true, but a better way to think about a PEP is as an administrative upgrade.
Employers still play an important role by supplying accurate payroll data, ensuring contributions are remitted timely and supporting plan operations with correct employee information. Of course, these responsibilities exist in any company-sponsored retirement plan. The difference with a PEP is that employers are no longer responsible for managing the entire system on their own.
In other words, PEPs reduce the volume of work, even if they do not remove every task. For most employers, that trade-off is a meaningful improvement.
Shared Responsibilities
In a PEP, the pooled plan provider typically serves as the plan sponsor and named fiduciary. The PPP is also responsible for recordkeeping and compliance work, handling such core functions as plan operations, compliance oversight, Form 5500 filings, audits and coordination with recordkeepers and other service providers. The law allows the PPP to act as the ERISA 3(16) administrative fiduciary itself or delegate the duties by engaging a third party.
Many PEPs also include a discretionary ERISA 3(38) investment manager, which means daily investment selection and monitoring are handled by professionals, rather than internal staff.
This structure represents a notable shift from how fiduciary responsibility works in a traditional single-employer plan. For a stand-alone plan, responsibility starts with the employer and is delegated outward. For a PEP, responsibility begins with the PPP, and employers focus on understanding and overseeing the duties that remain with them.
Those retained responsibilities are typically limited and manageable, including:
- Conducting due diligence when selecting a PPP;
- Monitoring service quality and ensuring it remains appropriate; and
- Confirming that fees are reasonable relative to services provided.
The scope of employer responsibility can vary depending on how a PEP is structured. For example, some PEPs retain full discretion over investments, while others require employers to hire or monitor an investment fiduciary. Understanding these distinctions ahead of time helps employers choose a PEP that aligns with how involved they want to be.
The same principle applies to administration. While most responsibilities flow through the PPP, reviewing the service agreement helps employers clearly see which tasks, if any, are delegated back to them.
Flexibility Can Be a Real Advantage
Not all PEPs are built the same. Some rely on standardized designs, while others offer flexibility that allows employers to preserve features important to their workforce and culture. For employers with long-standing plans or specific objectives, flexible PEPs can offer meaningful advantages such as:
- Plan designs tailored to an employer’s goals;
- The ability to retain features from a prior single-employer plan; and
- Compatibility with other benefit programs such as cash-balance plans.
This flexibility helps ensure that efficiency does not come at the expense of fitting with the employer’s needs and culture. When employers find a PEP structure aligned with their needs, the transition often feels less like giving something up and more like gaining helpful support.
A More Confident Way to Manage Fiduciary Responsibility
PEPs do not eliminate fiduciary responsibility, but, rather, they professionalize it. By giving more responsibility to dedicated specialists, employers can meet their obligations more efficiently and with greater confidence.
For many organizations, that is the real value of a PEP: handling responsibility in a smarter, more sustainable way.
Employers considering a PEP should work closely with their adviser or consultant to understand how responsibilities are allocated and whether a PEP structure aligns with their internal resources and risk tolerance. When done thoughtfully, a well-managed PEP can offer exactly what employers are looking for: less work, clearer governance, better participant outcomes and greater peace of mind.
Steve Chappell is assistant vice president of retirement plan sales at The Standard.
This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of ISS STOXX or its affiliates.
