Pooled Employer Plans: The Start of a New Era for Retirement Plans

The introduction of defined contribution pooled employer plans (PEPs) shepherds in a new era in US retirement planning. We have seen the US retirement marketplace evolve over the last 100 years, driven by corporate strategies as well as federal regulations.

As we get ready for 2021, the next stage of retirement plan evolution is upon us. At Aon, we believe the path of PEPs in the US will follow those seen already in other countries around the world – with Australia/New Zealand notably the furthest along the journey, followed by South Africa and, more recently, the UK and Ireland. It is quite possible there will be very few standalone single-employer defined contribution plans in 20 years – all but replaced by PEPs. Aon believes the PEP can help employers deliver better retirement outcomes to their employees with lower fees, less staff time and involvement, and better fiduciary governance (i.e., less fiduciary risk) – allowing the employer to better focus their energy on running their business and taking care of their people.