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Introduction

Rising costs, more regulations and higher employee expectations are putting traditional retirement plans to the test. This is especially true for small- and mid-sized businesses trying to stay competitive while managing growing complexity.

Against this backdrop, PEPs are emerging as one of the most significant innovations in the retirement plan landscape. By reimagining how plans are structured and managed, PEPs offer employers a more efficient, scalable and flexible solution.

A structural shift in the retirement plan market

The growing interest in PEPs signals a broader transformation in how employers deliver retirement plans.

Adoption is growing across the market, with more employers getting on board and providers expanding their capabilities. At the same time, evolving plan structures and service models have made PEPs more flexible and better suited to a broader range of employer needs.

For many organizations, this combination of scale, efficiency and innovation is reshaping how they approach retirement benefits.

Addressing complexity through scale

At its core, a PEP allows multiple unrelated employers to participate in a single, professionally managed retirement plan. This pooled structure creates meaningful efficiencies by centralizing administration, fiduciary oversight and investment management.

For employers, this translates into a simplified operating model that reduces the day-to-day burden on internal teams and helps streamline compliance in an increasingly complex regulatory environment.

For businesses with limited HR or finance resources, this shift can be transformative, enabling them to focus on their core operations while maintaining a high-quality retirement offering.

Key advantages of PEPs

Addressing the cost and complexity associated with retirement plan audits

By participating in a pooled structure, employers may reduce or eliminate the need for a standalone annual audit, as oversight is conducted at the plan level rather than the individual employer level. This can result in meaningful cost savings while also minimizing the operational disruption that audits can create.

As a result, PEPs have become an increasingly compelling option for:

  • Organizations approaching the audit threshold, where additional requirements and costs come into play
  • Employers already subject to audits who are seeking a more efficient, streamlined alternative

Delegating responsibility of fiduciary oversight

Beyond administrative efficiencies, PEPs also address another critical challenge: fiduciary responsibility.

Managing a retirement plan requires ongoing oversight of investments, compliance and plan operations—responsibilities that can carry significant risk. PEPs help mitigate this burden by centralizing key fiduciary functions within a professionally managed framework.

For employers, this represents a shift toward a more outsourced, expert-driven model, providing both confidence and clarity in an area that is becoming increasingly complex.

From standardization to increased flexibility

Today’s PEPs offer employers more choices in plan design and investments, enabling them to align their retirement programs more closely with their workforce and organizational goals.

This includes:

  • Broader selection of investment lineups
  • Greater flexibility in plan design and features, such as eligibility, match formulas, and vesting schedules to align with employees’ needs

As a result, PEPs are increasingly being viewed not as a one-size-fits-all solution, but as a platform capable of supporting diverse employer needs.

Enhancing outcomes for employees

While much of the conversation around PEPs focuses on employers, the benefits extend directly to employees as well.

Access to professionally managed investment options, participant engagement tools, and personalized communications can help drive stronger retirement outcomes—improving participation, savings behavior, and long-term readiness.

In a competitive labor market, this is more than a financial benefit—it is a key component of an employer’s value proposition.

A strategic opportunity for employers

PEPs are more than a way to cut costs and reduce administrative work. They offer a smarter approach to retirement benefits. Organizations can simplify plan management, stay ahead of compliance demands, and offer competitive benefits without building everything in-house. As adoption grows, PEPs are becoming a more flexible and efficient way to support employees’ retirement needs.

Key considerations of PEPs

While PEPs offer clear advantages, plan sponsors should weigh several important considerations:

  • Reduced control: PEPs do allow for some flexibility, but they limit the ability to customize investment menus and certain plan features
  • Fiduciary responsibility remains: Employers still must select and monitor the Pooled Plan Provider
  • Cost variability: Savings are not guaranteed, and bundled PEP pricing may include services or features that plan sponsors or participants do not fully utilize. This can potentially lead to unnecessary costs
  • Provider dependence: Service quality and participant experience are highly dependent on the Pooled Plan Provider
  • Audit fees: These fees may not be fully eliminated
  • Transition complexity: Entering or exiting a PEP can require careful planning

Is a PEP right for your organization and employees?

Plan sponsors should work closely with their advisors to determine whether a PEP makes sense for their organization and employees. This involves evaluating key factors such as administrative capacity, cost efficiency and the desire to delegate fiduciary responsibility. PEPs can simplify plan management and shift much of the compliance and oversight burden to a pooled provider, but they may also limit customization.

By working through these trade-offs together, advisors help plan sponsors make a more strategic, well-informed decision aligned with their goals and resources.

For more information on Retirement Plan Services, please visit our website.

Disclaimers

This publication is provided by UBS Financial Services Inc. This publication is provided for informational purposes only, contains a brief summary of the topic discussed and does not represent a comprehensive discussion or considerations necessary for making effective decisions. You should seek appropriate professional advice regarding the matters discussed in this publication in light of your specific situation. Neither UBS Financial Services Inc. nor any of its employees provide tax or legal advice. You should consult with your legal and/or tax advisors and the provider of your plan administration services regarding your retirement plan.

Expiration: 6/9/2027
Review Code: 5560936