Website design By BotEap.comLeaders in the pension and retirement industry are beginning to offer “joint employer plans” (PEPs) to small and medium-sized businesses that want to offer pension benefits to employees. The PEP is a new type of multiple employer plan (MEP), which must be administered by a “combined plan provider” (PPP).

Website design By BotEap.comA PEP is a new pension offer made possible by the SECURE Act of 2019, also known as Each Community Configuration for Retirement Enhancement. The Act amended the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code to allow for the new pension option.

Website design By BotEap.comUnder a pooled employer plan, small unrelated businesses can now offer defined contribution pension plans to employees by teaming up with other employers. PEP employer benefits can include lower fees, simplified administration, as well as easier reporting and compliance. The new plans are also expected to reduce the risk of litigation and fiduciary.

Website design By BotEap.comTop Investment Firms Offer PEP Plans in 2021

Website design By BotEap.comPension and benefits industry leaders are at the forefront of offering new combined plans and services for employers. The first participants in the market are listed below.

Website design By BotEap.com• Fidelity Investments began offering the Fidelity Advantage 401 (k) combined employer plan on January 21, 2021. The program is initially limited to small businesses, defined as five to 50 employees, that previously did not offer any pension benefits. The size of the qualified employer is expected to increase over time. Fidelity will act as the combined plan provider, records manager, trustee, 3 (16) plan manager, and 3 (38) investment manager.

Website design By BotEap.com• Paychex, Inc. offers to serve as plan sponsor and formal plan administrator for PEPs targeting its 680,000 payroll clients. These small and medium-sized businesses can now leverage Paychex to handle setup, deployment, monitoring, enrollment, and other plan tasks. Mesirow Financial will act as the 3 (38) investment manager of PEP and Mid Atlantic Trust Company will act as trustee.

Website design By BotEap.com• Principal Financial Group ® announced in November 2020 that it offers Principal® EASE, a common employer plan that combines integrated retirement plan administration, customer service, and investment management capabilities. The service targets employers’ plans from start-up to $ 10 million in assets under management. National Benefit Services, LLC will act as third party administrator and Wilshire® as investment trustee.

Website design By BotEap.com• Aon plc launched its joint employer plan in January 2021 with two employers and is scheduled to add three additional clients through April. Voya Financial provides full service record keeping for all employers. Aon projects that most US employers will merge their traditional 401 (k) into joint employer plans over the next 10 years.

Website design By BotEap.com• NPPG, Inc., a retirement benefits and consulting company that works with 4,000 plan sponsors, announced in February 2021 that it is expanding its employer retirement plan offerings to include service as a bundled plan provider (PPP). . Your initial customer is Lockton Companies, LLC (Northeast Series) Pooled Employer Plan (PEP), EZ Flex 401 (k). NPPG will act as the provider of the combined plan (PPP) and 3 (16) Administrative Trustee.

Website design By BotEap.comSmall employers weigh the benefits of PEPs

Website design By BotEap.comOnly 55 percent of workers employed by small businesses (defined as 1-99 workers) have access to retirement benefits, according to the US Bureau of Labor Statistics.The SECURE Act offers small employers the following benefits:

Website design By BotEap.com• The provider of the combined plan is the sponsor of the plan and relieves the employer of significant fiduciary responsibility.

Website design By BotEap.com• Blended plan provider takes responsibility for audits, which can save employers $ 10,000 to $ 20,000 per year.

Website design By BotEap.com• Pension benefits can now be offered to employees who might not otherwise be able to save for retirement, thus improving employee satisfaction and retention.

Website design By BotEap.comSome employer groups are actively looking for new retirement plan options. One is the Michigan Small Business Association, with more than 28,000 small business members. SBAM is looking for bundled plan providers. The organization has issued three Requests for Proposal (RFP): one for eligible record holders, one for external administrators, and one for ERISA 3 trustees (16). The group hopes to offer a PEP to member companies later this year or early 2022.

Website design By BotEap.comPooled Employer Plans Versus Multiple Employer Pension Plans

Website design By BotEap.comThe employer group pension plan should not be confused with “multi-employer” pension plans, which are defined benefit plans that are created through one or more collective bargaining agreements (CBA) between employers and one or more employee organizations or unions. . Up to 10 million American workers participate in 1,400 multi-employer defined benefit pension plans.

Website design By BotEap.comAlso separate from the common employer plan and the multiple employer plan is the “multiple employer pension plan” (MEPP). A “multiple employer” plan is a 401 (k) defined contribution plan maintained by more than one employer but without a collective bargaining agreement.

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