(Video) Annuity Purchases – Fiduciary Responsibilities

It’s important for pension plan fiduciaries to understand their responsibilities when selecting an insurer as part of an annuity purchase transaction. Watch our short video below to understand what you need to know.



  • Pooled Employer Plans (PEPs) are defined contribution 401(k) plans established by professional groups overseeing all aspects of the plan design.
  • PEPs are not entirely new; the SECURE Act, effective in 2021, allowed different businesses to pool resources and join a single PEP, leading to their increased popularity.
  • Advantages of joining a PEP include fee reduction (up to 25-50%), reduced fiduciary responsibility, and less time and effort spent on plan administration.
  • Disadvantages include certain elements being streamlined due to professional management, and the need to go through a blackout period during the initial transition.
  • PEPs are particularly beneficial for plan sponsors with assets below $200 million, as they can benefit from fee savings, reduced fiduciary risk, and time and expense savings.



[Michael] “Hey everyone my name is Michael Clark, managing director at Agilis based out of Denver Colorado, I’m joined by Agilis’s Chief Executive Officer Tom Casara and today we wanted to talk briefly about pooled employer plans. Tom, what is a pooled employer plan?”


[Tom] “A pool deployer plan is a defined contribution 401k plan that is established by a professional group that’s going to oversee all elements of the 401K design.“


[Michael] “So are these new? How come we haven’t heard of these before? “


[Tom] “So the quick answer to your question Michael is no they are not quite new but what has happened is that the secures act effective in 2021 allowed plan sponsors who otherwise aren’t in the same line of business to come together to be able to share resources and to join into a pet plant so the marketplace for perhaps has has opened widely effective 2021 and now that’s become the popularity of the pep plants.”


[Michael] “All right so if companies are coming together pooling resources there’s got to be some advantages there. What are some of the advantages for a company that is looking to join a pooled employer plan?”


[Tom] “There are many advantages in fact I tend to think of it as three main advantages 

  • The first is fee reduction because of being able to pull resources and have more assets at work along with you know streamlining some of the the benefits we’re able to save money in fact for for many plans we see 25 to 50 percent of savings as compared to their current costs
  • Second is fiduciary savings because these plans are professionally managed by an outside organization who’s taking on that liability. There is less for the plan sponsor to oversee and to be responsible for in terms of fiduciary responsibility, doesn’t go to zero but it gets greatly reduced in what you do from quarter to quarter gets greatly reduced, 
  • The third is the time and effort by the plant sponsor themselves because a lot of the administration is now going to be outsourced and things like an audit is no longer a responsibility of those of the plant sponsor, there are many less steps for the plan sponsor to oversee and to do. So there’s there’s once again fiduciary savings fee savings and Time and expense Savings “


[Michael] “So that that sounds all good right but like with anything there’s got to be some disadvantages that uh companies are going to want to weigh against these advantages what are those disadvantages? “


[Tom] “I would say to come in and two there’s two buckets of disadvantages the first bucket would be just that with with the professionally managed and Outsourcing there’s gonna be certain elements that they’re going to want to streamline mostly around Administration but mostly around the secondary decisions of the administration so the primary part of a plant design is typically the formula itself in terms of the match as well as the the a profit sharing that you may want to contribute. Those you’ll still be able to retain but items like loans and hardship withdrawals and items like that those are going to be streamlined across the entire PEP so that will be the one that surveyors. The second disadvantage if you were to choose a PEP it’s like any any other Record Keeper change you’re gonna you’re gonna have to go through that blackout period um it’s just the initial Contracting and the blackout period to make a change but that was a normal course of business if any change.”


[Michael] “So I mean it sounds like there’s there’s a lot for plan sponsors to weigh here right the advantages sound great in terms of fee savings reduced fiduciary risk less time and effort that they as a company have to put into managing and administering a plan some disadvantages as you’ve mentioned some of those one-time disadvantages like a transition. So who should be looking at pooled employer plans as a potential program for their retirement benefits?”


[Tom] “Personally I think every plant sponsor should at least evaluate whether or not a pooled employer plan makes sense as a fiduciary it’s your responsibility to to see if there is a better option for your participants, but what we’ve found in our experience is that those plans that are probably less than 200 million of assets are going to pick up all three buckets of those advantages they’re going to see those those fee savings and then get the reduced time and expense savings as well as the fiduciary savings the larger plans will get the last two typically of the savings” 


[Michael] “Excellent Tom thanks for this um everyone else we want to uh invite you June 6th put that on your calendar we’ll be sending out invites for an in-depth webinar that where we’ll be discussing pooled employer plans in great detail come see if they’re right for you until next time thanks everyone foreign”


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