PEPs are defined contribution plans that allow a group of unrelated businesses to pool their employees’ retirement funds into a single plan managed by a third-party provider. This helps to reduce administrative tasks, such as compliance and reporting, and provides protection from fiduciary risk.

Introduced by the SECURE Act in 2019, PEPs are designed to help close the retirement income gap among workers who do not have access to retirement plans through their employers. Industry data shows more than 40% of small businesses still do not offer retirement plans to their employees due to plan costs, administration and the need to manage plan investments. 

In a recent Equitable-commissioned consumer survey, 80% of Americans agreed that all employers, regardless of size should provide a retirement plan for their employees, and more than 8 in 10 of those surveyed indicated they would decline a new job opportunity if it did not include a retirement plan.
 
Equitable’s new PEP offering is designed to provide small and medium-sized businesses with a cost-efficient way to offer their employees a workplace retirement plan. Through Equitable Retirement Access, businesses can provide their employees a high-quality workplace retirement plan. The offering enables employers to enhance plan governance, mitigate risk and reduce administrative burdens. There are also potential cost savings, especially for employers with more than 100 participants.

Equitable is aiming its new PEP in the “$0-$50M assets under management space for corporate and not for profit entities,” said Jim Kais, Head of Group Retirement at Equitable. “Our belief is that we must start with serving those that need help the most, and that begins with smaller to mid-size businesses and not for profits that stimulate hiring and economic growth in the communities where we live and work.
 
“Further, we will leverage the experience we have with multiple employer plans (MEPS) for Professional Employer Organizations (PEOs) and associations, which provides us with strong momentum and a promising pipeline of existing relationships that we expect to tap into to cover more American workers in the private retirement plan system. Associations and PEOs view PEPs as an offering that can reduce time spent on plan administration and provide access to institutional investment offerings, participant education, and guidance. These plans can also help them simplify the payroll process and audit support, and provide them with fiduciary oversight.”

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

“Small businesses are an important growth engine for the U.S. economy, creating two-thirds of new jobs in recent decades. Yet, millions of these employees lack access to workplace retirement savings plans, hindering the ability of small business owners to attract and retain talent,” said Kais. “Our new 401(k) PEP offering makes it easier for small business owners to provide an affordable solution to help their employees build a secure financial future, while alleviating the administrative burdens of running a retirement plan.”

Through its Group Retirement business, Equitable partners with school districts, municipalities, not-for-profit entities and small-to-medium-sized businesses to provide tax-deferred investment and retirement solutions, including 401(k), 403(b) and 457(b) plans for their employees, to more than 1.2 million clients.