Now that the Department of Labor has adopted a final rule establishing registration requirements for pooled plan providers, the last remaining obstacle has been removed for retirement plan providers looking to put pooled employer plans (PEPs) out there.
The SECURE Act is paving the way for unrelated employers to participate in a single, pooled employer plan beginning next year. In support of this legislative action, Principal Financial Group today announced it has teamed up with other key service leaders to provide Principal EASE, a uniquely designed PEP that combines integrated retirement plan administration, customer service and investment management capabilities.
The SECURE Act allows pooled plan providers to start operating pooled employer plans beginning on Jan. 1, 2021 but requires that pooled plan providers register with the Secretary of Labor and the Secretary of the Treasury before they begin operations as a pooled plan provider.
Des Moines, Iowa-based Principal is taking responsibility as the Pooled Plan Provider (PPP) for Principal EASE, overseeing the operation of the PEP, helping to ensure the plan meets regulatory requirements and helping employers reduce administrative work and fiduciary risk. This packaged fiduciary solution will be available for financial professionals to offer employers in 2021.
“The workplace is such an effective place to increase access to retirement savings plans,” said Jerry Patterson, senior vice president of Retirement and Income Solutions at Principal. “Our position as a leading service provider of retirement plans in the U.S. opens the door for Principal to provide input on legislative efforts, which remains focused on helping increasing access to retirement plans for all American workers.”
Citing U.S. Bureau of Labor statistics, Principal noted only 55% of workers employed by small businesses (1-99 workers) have access to retirement benefits. With a goal of increasing access to more American workers, Principal said Principal Ease will deliver a professionally managed approach—streamlining decisions for employer plans from start-up to $10 million in assets under management (AUM). Beginning next year, financial professionals will be able to offer the program powered by what the company said is the latest in tech innovation, service integration and data security.
“By shifting liability to designated fiduciaries with specific knowledge and skills, employers benefit from investment management as well as reduced administrative tasks and risks,” Patterson said.
Principal Ease brings together the combined strength and expertise of Principal as the Pooled Plan Provider (PPP) and recordkeeper, along with National Benefit Services, LLC (NBS) as the third-party administrator (TPA) and Wilshire as the investment fiduciary. NBS brings 30 years of administrative and multiple employer plan (MEP) experience and has a track record of success providing retirement administration to more than 20,000 employers across the country. Wilshire brings a long history of investment management experience, developing market-tested strategies and innovative best practices garnered from meeting the needs of large institutional investors.
More than a third of defined contribution plan sponsors (38%), both large and small, recently reported they may look to join a multiple employer plan (MEP) or PEP in the next two years. In preparation for future demand, Principal said it will look to continue working with other firms on joint PEP arrangements to continue to help more Americans feel more secure in their retirement.
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