Middle-Market Employers Embrace Pooled Retirement Plans: A New Era

The landscape of employee benefits is evolving, and for middle-market employers, the complexities of managing retirement plans have become a significant challenge. Traditionally, these businesses have faced a disproportionate share of retirement plan complexities compared to their larger counterparts, which can distribute these burdens across specialized teams. However, the introduction of Pooled Employer Plans (PEPs) represents a turning point, offering a streamlined solution designed to reduce administrative overhead and fiduciary risk. As companies like CBIZ launch new PEP products, middle-market employers are starting to reconsider their retirement strategies in light of this innovative option.

Mike Ziccardi, Executive Vice President of CBIZ's Retirement & Investment Solutions Practice, highlights the pressing issues these employers face: navigating evolving regulations, managing vendor relationships, and absorbing fiduciary risks. All of this must be done while keeping operational costs in check. PEPs allow multiple employers to share one professionally managed 401(k) plan, significantly lightening the administrative load and shifting some fiduciary responsibility away from individual companies. As interest in PEP structures grows, it’s essential to understand their implications for middle-market businesses and how they can leverage these plans for better employee engagement and compliance.

The Evolution of Pooled Employer Plans

PEPs have been a part of the retirement planning landscape since the SECURE Act was signed into law in December 2019, but their adoption among middle-market employers has been gradual. Ziccardi notes that such innovations typically gain traction first among larger companies, with smaller firms often taking a 'wait-and-see' approach. These businesses prefer to observe how early adopters fare before making any significant changes to their retirement plans.

Despite the slow uptake, Ziccardi is optimistic about growing interest. “We are beginning to see the market thaw,” he says, indicating that as PEPs establish a track record of success, more employers are likely to take the plunge. According to the U.S. Department of Labor's 2025 Pooled Employer Plan Bulletin, the number of registered PEPs across the country has been steadily increasing, reflecting a shift in the retirement planning landscape.

Understanding Fiduciary Responsibilities

For many employers, the most appealing aspect of a PEP is the transfer of fiduciary responsibility. Historically, retirement plan advisors were primarily viewed through the lens of investment oversight; however, the conversation has evolved. Employers are now increasingly focused on comprehensive fiduciary risk management, governance, cybersecurity, participant outcomes, fee reasonableness, and operational compliance.

As regulatory scrutiny intensifies, employers are becoming more selective about their retirement plan providers. Ziccardi points to a shift from generalist investment advisors to specialized firms that can adeptly navigate the complex fiduciary landscape. When considering a PEP, careful vetting of the pooled plan provider (PPP) is crucial. This provider is the named fiduciary responsible for selecting and managing key service providers.

Employers should be wary of potential conflicts of interest, especially when a PPP holds multiple roles, such as serving both as an advisor and a recordkeeper. Effective oversight requires independence, and it’s vital for employers to understand who is accountable for service provider performance.

Retirement Plans as Talent Differentiators

The quality of retirement plans has emerged as a pivotal factor in talent acquisition. As the workforce landscape becomes increasingly competitive, middle-market employers are recognizing that a well-structured retirement plan can enhance their recruitment and retention efforts. Ziccardi emphasizes that leading employers no longer view retirement plans in isolation; instead, they are integrating these plans into a broader strategy that encompasses benefits, financial wellness, and total rewards.

Modern technology has enabled organizations of all sizes to personalize benefits, enhancing the employee experience. Just as consumers receive tailored recommendations in other aspects of their lives, employees now expect a similar level of personalization in their benefits offerings. Consequently, employers are focusing less on merely providing a retirement plan and more on creating an engaging experience that fosters financial confidence and readiness for retirement.

The Cost Perspective: Value Beyond Savings

While cost savings are often touted as a primary benefit of PEPs, Ziccardi warns that such framing can oversimplify their value proposition. The pooling of employers to achieve economies of scale is certainly appealing, but employers should prioritize whether a PEP meaningfully reduces fiduciary burdens, simplifies administration, and improves participant outcomes.

Employers should also evaluate the quality of participant support, technology capabilities, financial wellness resources, and overall employee experience when considering PEPs. Fee savings may be a component of the equation, but they should not overshadow the broader implications for employee engagement and satisfaction.

Looking Ahead: The Future of PEPs

Despite the optimism surrounding PEPs, Ziccardi maintains a realistic outlook on their potential mainstream adoption. For PEPs to become the default structure for retirement plans, employers will need greater awareness of their fiduciary and administrative benefits. Additionally, successful outcomes must be proven, and employers must gain confidence that they can achieve these benefits without sacrificing organizational flexibility.

CBIZ’s integrated model, which combines retirement consulting with employee benefits, insurance, payroll, and advisory services, is designed to address the intersection of these issues. As the complexity of managing retirement plans increases, having a comprehensive approach to employee benefits will be crucial for middle-market employers seeking to optimize their workforce strategies.

Key Takeaways

• PEPs streamline retirement plan management by allowing multiple employers to share a professionally managed 401(k) plan.
• Fiduciary responsibility is a significant draw for employers considering PEPs, shifting the focus from investment oversight to comprehensive risk management.
• Retirement plans are becoming critical to talent acquisition as firms integrate them into broader employee benefits strategies.
• Cost savings are important, but employers should prioritize the quality of participant support and overall employee experience.
• Future growth of PEPs hinges on proving their fiduciary and administrative benefits while maintaining flexibility for employers.

Frequently Asked Questions

What are Pooled Employer Plans (PEPs)?

Pooled Employer Plans (PEPs) are a type of retirement plan that allows multiple employers to participate in a single, professionally managed 401(k) plan. This structure helps to alleviate the administrative complexities and fiduciary risks that often burden individual employers, making retirement planning more accessible and efficient for middle-market businesses.

How do PEPs reduce fiduciary risk for employers?

PEPs transfer certain fiduciary responsibilities from individual employers to the pooled plan provider (PPP), who acts as the named fiduciary responsible for overseeing plan administration, selecting service providers, and ensuring compliance with regulations. This arrangement allows employers to mitigate their personal exposure to fiduciary liability associated with retirement plan management.

Why is the adoption of PEPs among middle-market employers slow?

Adoption of PEPs in the middle-market sector has been cautious. Many employers tend to observe early adopters before committing to a new plan structure, leading to a measured uptake. Additionally, retirement plans are not typically the largest budget item for most companies, reducing the urgency to switch to a pooled plan.

What factors should employers consider before transitioning to a PEP?

Before transitioning to a PEP, employers should evaluate the quality of participant support, the technological capabilities of the plan, and the integrated financial wellness resources available. They should also carefully vet the pooled plan provider to ensure there are no conflicts of interest that could impact the effectiveness of oversight and governance.