What is a PEP?

Pooled Employer Plans, or PEPs, allow multiple employers to pool their resources to offer a shared 401(k) plan to their employees. This approach can reduce administrative burdens and costs associated with offering a retirement plan, making it more feasible for smaller employers.

What are the benefits?
  • Cost Efficiency: By pooling together, employers can achieve economies of scale, potentially leading to lower administrative costs and investment fees.
  • Reduced Administrative Responsibility: The administrative duties and fiduciary responsibilities are transferred to a Pooled Plan Provider (PPP), reducing the workload on individual employers.
  • Access to Better Investment Options: The larger asset pool may allow access to more diverse and potentially higher-quality investment options that might not be available to smaller individual plans.
  • Simplified Management: Employers can offer a competitive retirement plan without having to manage it directly, making it easier to focus on their core business.

For further details, read more from Ropes & Gray – Pooled Employer Plans (“PEPs”): Putting a little PEP in a 401k retirement plan could help to protect your Portfolio Companies.

PEPs can be an attractive option for smaller employers looking to offer retirement benefits without the heavy lift of managing a plan themselves. However, it’s important for employers to carefully consider their options, understand their responsibilities, and choose a reputable PEP to ensure the success of their 401(k) plan offering.

Our affiliate, Smith Brothers Financial, has managed pooled employer plans for over 20 years. Our dedicated team is prepared to support the optimization of your portfolio companies’ 401(k) plans. For more information on Smith Brothers Financial, please visit www.SmithBrothersFS.com today.