With the turn of the new year in 2024, Pooled Employer Plans (PEPs) would have completed three years of operation. The introduction of PEPs was trumpeted by applause, with numerous providers eagerly launching new plans. Yet, there’s an undeniable undercurrent beneath the celebrations; a number of PEPs, likely in the dozens range, appears to have silently shuttered their operations.
This observation is posited by Ary Rosenbaum of The Rosenbaum Law Firm P.C., who recently remarked upon this trend in a blog post.
Rosenbaum’s full comments delve into the challenges PEPs have faced since inception, and the factors that could be causing these closures.
Providing multiple employer retirement plans under the Secure Act, PEPs were instituted to improve access to retirement savings, particularly for small businesses. The benefits they offer, from economies of scale to decreased fiduciary responsibilities, made PEPs look like the perfect retirement plan solution. However, as with any innovation within a complex ecosystem like employer retirement plans, it has not been entirely smooth sailing.
Indeed, as we approach the three-year mark, it’s becoming abundantly clear that not all PEPs have been met with the success they initially envisioned. The ones that have closed their doors tell a different narrative, one of challenges, roadblocks, and ultimately, a struggle to survive in a competitive market.
Still, the PEP story is far from over. As Rosenbaum’s post suggests, PEPs will likely continue to navigate this dynamic landscape, continually adapting and evolving. Yes, some have closed, but many more remain – persistently striving for success, no matter the obstacles in their path.
Only time will reveal the full story, but as we close in on the third year of PEPs, it will be enlightening to see how these plans evolve, what challenges they continue to face, how they adapt, and how they influence the employer retirement plans landscape.