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Aon has announced the launch of a pooled employer plan or PEP, a type of workplace retirement plan that lets unrelated employers participate in the same 401(k) plan. The PEP will take advantage of the expertise of Aon Investments USA., Aon's investment solutions group, and Voya Financial will serve as the recordkeeper for the plan.
Pooled employer plans owe their existence to the SECURE Act passed in December 2019, which changed several regulations around multiple employer plans, enabling employers from a variety of businesses and industries to join a single 401(k) plan and offer it to employees.
"We believe PEPs will be transformational in the 401(k) world," Rick Jones, a senior partner at Aon, told BenefitsPRO. Pooled employer plans offer plan sponsors "cost-buying power, risk management in offloading fiduciary duties, and the ability to offload tasks to focus on their core business," he said, while allowing plan sponsors autonomy over such decisions as contribution levels, who will be eligible, and vesting provisions.
The SECURE Act may have had SMBs in its sights regarding expanding retirement plan access to more workers when it authorized PEPs, and yet "we're finding it resonates across all sizes of companies," he said.
The combination of being able to relieve employers of many fiduciary duties, the ability to take advantage of economies of scale to provide features that a small, individual plan might not be able to afford, while still letting employers have some autonomy could prove desirable even to those companies that already sponsor a single employer plan, he said.
The plan will be available Jan. 1, 2021.
The SECURE Act, passed and signed into law around the holidays at the end of 2019, offered what many have said is "sweeping" retirement legislation, much of which took effect Jan.1, 2020. Although SECURE didn't create multiple employer plans, it removed barriers to their adoption, including the requirement that each employer must file its own Form 5500, that all employers in a plan have some link to each other or "commonality," and the "one bad apple" rule, which had originally in effect caused compliance problems for all plan sponsors in a plan even if only a single employer had committed the error.
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