Agilis Pooled Employer Plan Market Update – H1 2024
Welcome to our semiannual update of our market insights on Pooled Employer Plans (PEPs). As an independent consulting firm specializing in PEPs, we are dedicated to providing you with unbiased information to help you navigate the evolving landscape of PEP management. Our expertise in the PEP community ensures that you receive accurate and relevant updates without any affiliations or fees from PEP providers. Here are the key highlights and updates for the first half of 2024:
1. Market Trends and Metrics
- Significant Growth Continues: The returning Pooled Plan Providers (PPPs) we surveyed averaged a 41% growth in assets fueled by a 22% increase in the number of adopting employers combined with market performance in the first half of 2024.
- Minimal Turnover: Less than 2% of adopting employers have exited their PEPs so far in 2024, with the majority of these due to an acquisition by a larger organization and a merger into their existing 401(k) plan.
- Fund Lineup Changes: Over our last two surveys, several PPPs reported changes to their investment lineups consistent with the growth of assets in the PEP. These include vehicle changes to reduce costs and modest changes to multi-manager strategies, along with limited changes to the stand-alone offerings.
2. Regulatory Updates
- SECURE 2.0 Act Implementation: The implementation of SECURE 2.0 Act provisions is continuing to influence the PEP market. Recent guidance has clarified and expanded rules around automatic enrollment and increasing contribution limits, enhancing the appeal of PEPs for both employers and participants. The majority of PPPs are automatically adding the increased age catch-up limit for participants aged 60-63 effective January 1, 2025. Similarly, most of the PPPs are adding some or all the optional withdrawal provisions.
- DOL Guidance: The Department of Labor (DOL) has provided updated guidance on fiduciary responsibilities and disclosure requirements for PEP sponsors. These updates aim to improve transparency and governance within PEPs, ensuring that plan sponsors adhere to best practices.
- State Legislation: Several states have introduced new regulations affecting retirement plans, including PEPs. This includes enhanced disclosure requirements and additional fiduciary responsibilities, which will affect how PEPs operate in different jurisdictions.
3. Continued Awareness and Education
- Educational Campaigns: Awareness campaigns promoting the advantages of PEPs have gained further momentum. These campaigns are designed to educate employers and employees about the benefits of PEPs, including simplified plan management and cost efficiencies. For more information on our educational resources, please visit www.agilis.llc.
- Industry Commentary: The National Association of Plan Advisers recently featured an article with insights from retirement plan expert Fred Reish. Reish predicts that PEPs will become as prevalent as single-employer plans within the next 5 to 10 years. This highlights the growing acceptance and potential of PEPs in the retirement planning landscape. You can read the full article here.
4. Technological and Market Developments
- Technology Integration: The integration of advanced technology in PEP management continues to evolve. Enhanced digital platforms and automated compliance tools are improving participant experiences and operational efficiencies within PEPs.
- Market Competition Continues to Increase: The competitive environment for PEP providers remains dynamic, with new entrants and existing providers expanding their offerings. This competition is likely to lead to better plan features and potentially reduced costs for employers.
Conclusion
As we move through the second half of 2024, the PEP market demonstrates a blend of stability and growth. With increasing participant numbers, evolving regulatory frameworks, and enhanced awareness efforts, PEPs continue to attract a diverse range of employers. We will continue to provide you with timely updates and insights to help you navigate the changing landscape of PEPs.
Thank you for staying engaged with our updates. For further information and resources, please visit our website or contact us directly.
