Trends

Why Larger Businesses are Making the Move to PEPs

Chris Magno

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Established businesses are rethinking how they structure their retirement benefits. Here's why pooled employer plans (PEPs) are becoming a strategic solution for financial advisors to help clients optimize their retirement plans.

Pooled Employer Plans (PEPs) aren't just for businesses looking to establish their first retirement plan.

Larger employers understand the challenges of retirement plan compliance and fiduciary responsibilities, and how they can take time and resources away from daily business operations.

For financial advisors representing companies with 100+ employees, PEPs represent an opportunity to expand their service offerings and help clients simplify plan administration, help reduce investment risk and refocus on their strategic priorities — all while accessing retirement benefits more efficiently.

The PEP difference for growing companies

In a PEP structure, most of the fiduciary responsibilities, plan management and administrative functions are outsourced to a third-party pooled plan provider (PPP):

• Streamlined compliance: One plan document, one Form 5500 and one audit, all managed at the pooled level.
• Eliminated audit burden: The PPP handles financial audits, so there's no employer cost and one less task to tackle.
• Reduced fiduciary risk: The PPP serves as plan sponsor and named fiduciary, assuming provider monitoring, and plan administration.
• Maintained flexibility. Customized plan design provisions, including eligibility requirements, contribution structures and vesting schedules remain available.

Not all PEPs deliver equal value

With PEP plans, the difference often comes down to administrative efficiency and risk mitigation infrastructure. Here are some considerations when evaluating potential providers for your clients:

1. Look for genuine embedded integration.

As payroll demands increase with headcount, real-time connectivity between payroll and recordkeeping systems eliminates manual reconciliation, can help reduce errors and promote confidence in plan compliance.

Digital technology may also improve participant experience, including mobile accessibility, intuitive enrollment and integrated financial wellness tools that can transform engagement and drive better retirement outcomes.

2. Evaluate how the PEP handles efficiency.

From plan health reporting to compliance testing to regulatory updates, the most efficient PEPs provide transparent dashboards that offer advisors visibility without requiring active plan management.

For midsized clients, this makes it possible to redirect resources from compliance management to revenue-generating strategies.

3. Assess fiduciary protection.

Who serves as the named fiduciary? How does the provider handle regulatory changes? Pooled Plan Providers assume substantial fiduciary responsibility, including regulatory compliance, which alleviates concerns and instills greater confidence in the plan's compliant operation.

Keeping up with the changing retirement plan landscape

Financial advisors play a critical role in helping business clients make the most of regulatory and market shifts. PEPs make it possible for employers to offer high-value, competitive retirement plan benefits to attract and retain employees without the complexity of managing a plan on their own.

Named a 2025 PLANADVISER Choice Awards winner, ADP brings together the technology, service infrastructure and fiduciary expertise that make PEPs work seamlessly for your clients of all sizes. To learn more, reach out to a licensed ADP Retirement Services District Manager or call (844) 237-3548.

_{ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.}

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