Pooled employer plans: Transforming retirement savings for small, midsize employers

Nearly half (47%) of employers opted for the pooled employer plan (PEP) as the first employee retirement plan they’ve offered, according to Transamerica’s first-ever survey of PEP adopters. Many respondents to the Pooled Plan Adopting Employer Research Survey were small- to mid-sized organizations and startups that have previously not offered retirement plans to employees because of the cost, administrative and fiduciary responsibilities.

Pooled plans help organizations of all sizes share the administrative, regulatory and management costs of providing a retirement plan, and help make plans accessible to more workers.

“We are a small nonprofit and could not have afforded to spend time to manage a plan,” said one survey respondent. “This is a great fit for an organization of our size.”

“SECURE 2.0 has significantly expanded access to pooled employer plans …,” said Darren Zino, head of retirement distribution at Transamerica. “Perhaps most notably, it’s opened the door for 403(b) plans to participate, which is a significant change for non-profits and educational institutions. We’re also seeing clearer guidelines on fiduciary responsibilities, particularly regarding contribution collection.                                                                                                              SECURE 2.0 has streamlined audit requirements for PEPs, “which is proving to be a substantial benefit for smaller employers,” he said. “Additionally, the expansion of start-up credits makes joining a PEP more financially feasible for many businesses. These changes collectively make PEPs more attractive and accessible to a broader range of employers. Our goal is to increase retirement plan coverage, especially among smaller employers who’ve historically found offering these benefits challenging. While there’s still work to be done, SECURE 2.0 represents a significant step forward in expanding retirement savings opportunities for American workers.”

Another key survey finding is that 44% of respondents said the top reason for offering a retirement plan was as a tool to attract employees. As employers of all sizes vie for talent, retirement savings plans are a benefit that can help employers stay competitive.

Other top reasons for launching a PEP, according to the survey, include:

• 37%: Good service for employees
• 31%: Ease of administration
• 29%: Offered through payroll provider

“Offering a retirement savings plan is becoming a non-negotiable benefit,” said Zino. “Transamerica’s survey found that 72% of start-ups and 61% of organizations converting to a pooled solution said it improved retirement planning for employees.”

Related: The power of pooled employer plans: A guide for advisors and small businesses

“Pooled plans are expanding access to programs that help everyday Americans save for a secure retirement,” said Zino. He emphasized the value of shared costs and responsibilities in meeting the retirement savings needs of both employers and employees.”

The survey also revealed a significant need for continued education, with 77% of respondents having little to no familiarity with pooled plans prior to adoption.

“Being in the pooled retirement space for many years, we have seen continued and increasing momentum with employers seeking ways to ease their administrative burden hurdle so they can focus on their own business growth,” said Zino. “This recent survey shines a light on how employers of all size are embracing this new model, so we do foresee continued momentum in pooled plans in 2025 and beyond.

“We work with advisors and consultants that likely have these employers as current clients and supporting them and their relationships with these employer clients supports their business models to provide new and impactful solutions to their clients. From seminars to individual meetings, we support the advisor and consultancy community … Transamerica will continue to lean into these opportunities.”