The Insured Retirement Institute (IRI) today submitted comments to the Department of Labor (DOL) encouraging the agency to push out guidance on pooled employer plans (PEPs).
The DOL had initially proposed a rule to provide interpretive guidance that would help employers choose high-quality, low-cost PEPs, and sought comments and information on leading market practices for the benefit.
In its comments, the IRI touted PEPs for consolidating administration, oversight, and investment management while expanding coverage, lowering costs, and simplifying employer responsibilities.
The comments submitted by the IRI urged the DOL to preserve flexibility in plan models by avoiding any limitation to PEP structures and allowing multiple models to coexist.
“From IRI’s perspective, PEPs represent a significant policy innovation with the potential to close coverage gaps and enhance retirement security for millions of Americans employed by small and mid-sized businesses,” said Emily Micale, director of Federal Regulatory Affairs at the IRI. “Continued efforts by DOL should remain focused on supporting continued flexibility and innovation in business models in the marketplace.”
The IRI also asks the agency to establish “practical” safe harbors that are broad and principles-based, with clear guidance on fiduciary responsibilities. While PEPs offer little control in plan design and investment options for employers, its advantages tend to outweigh those negatives, the IRI stated.
“…This structure provides important advantages, including streamlined administration, access to institutionally priced investments through improved buying power, and the benefit of professional governance that can enhance outcomes for both employers and participants,” stated Micale in comments. “With thoughtful regulatory guidance, PEPs can offer flexible and cost-effective solutions that enhance retirement security for employees, allowing employers to focus on their core business operations.”
Other recommendations from the IRI include mandating reporting requirements to avoid discouraging plan sponsors in participating; and promoting growth and expansion by adopting a regulatory environment that encourages PEP adoption.
“By supporting flexibility, clear guidance, and practical oversight, IRI believes the Department can strengthen PEPs as a vital tool to expand retirement plan access, reduce costs, and improve retirement security for millions of American workers,” Micale concluded.
PEPs have grown swiftly following its passage in the Secure Act of 2019. By the end of 2022, there were 190 plans covering more than 618,000 participants with nearly $5 billion in assets, according to the IRI.
Studies have shown that those who incorporate PEPs are satisfied with their retirement plan. Research from The Standard found that 83% of employers expressed satisfaction with their PEP experience, with a 26% increase in satisfaction after joining the PEP.