Manage HR Magazine | Wednesday, December 16, 2020
Through a PEP, employers can participate in a 401(k) plan that is administered by a Pooled Plan Provider (P3). The P3 acts as both plan formal plan administrator and sponsor, relieving employers of significant fiduciary as well as an administrative burden.
FREMONT, CA: In response to the provisions of the SECURE Act, Paychex, is going to be among the first in the retirement industry to sponsor as well as maintain a Pooled Employer Plan (PEP) to help businesses nationwide provide a cost-efficient retirement plan option for their eligible employees. The Paychex PEP will include decreased fiduciary liability for employers, simplified plan management, as well as decreased plan expenses when compared to single-employer retirement plan offerings.
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"Not only has the COVID-19 pandemic made business more complex than ever before, it's significantly impacted the financial security of millions of Americans. Expanding retirement plan access is critical to the long-term financial wellbeing of workers nationwide," stated Tom Hammond, Paychex vice president of Corporate Strategy and Product Management. "Our new PEP will provide business owners with a cost-effective plan option that relieves the compliance and administration burdens of a traditional 401(k) plan, giving their employees access to a robust retirement plan benefit and allowing them to confidently prepare for their financial future."
Through a PEP, employers can participate in a 401(k) plan that is administered by a Pooled Plan Provider (P3). The P3 acts as both plan formal plan administrator and sponsor, relieving employers of significant fiduciary as well as an administrative burden. The PEP especially provides a solution for small to mid-sized businesses that may have been unable to provide a retirement plan previously because of the lack of cost-effective plan options or the time or resources required to manage complex plan administration. Businesses currently offering an employer-sponsored qualified retirement plan can also benefit by merging their assets and plan into a PEP to potentially save time and money.
"For 10 consecutive years, Paychex has been named the number one 401(k) recordkeeper in the country by number of plans, according to PLANSPONSOR magazine," stated Hammond. "As the industry leader, we're uniquely qualified with the experience, the technology, and resources to be the provider of choice for this new plan type."
Paychex is joining hands with two other retirement industry leaders to offer services for the PEP offering. Mesirow Financial is expected to serve as the 3(38) investment manager of the PEP, and Mid Atlantic Trust Company is expected to serve as the Trustee.
"Over the last five years, we have seen a shift from 3(21) to 3(38) fiduciary services, particularly at the smaller end of the retirement plan market. These small and mid-size employers appear to be signaling an openness to fully outsourcing fiduciary duties and will likely be interested in the fiduciary support afforded in a PEP," stated Mike Annin, senior managing director of Fiduciary Solutions at Mesirow Financial. "We are excited to serve as a 3(38) fiduciary in the Paychex PEP and join Paychex in leveraging this unique solution aimed at making retirement plans more accessible to millions of Americans currently without one."
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