Pooled employer plans (PEPs) and participant personalization are among the top priorities for recordkeepers, as firms seek to develop new revenue opportunities and retain participant assets, finds new research from Cerulli Associates.
PEPs amounted to nearly $12 billion from 2022 to 2023 and gained another $9 billion in 2024. The number of plans who adopted PEPs also increased over the years, from 109 in 2021 to 339 in 2024, with over 50,000 employers now participating in a PEP.
“It’s no surprise that PEPs are top of mind for recordkeepers, as momentum and interest are building from plan sponsors,” says Chris Bailey, director at Cerulli. “Our research shows 20% of plan sponsors planning to conduct a recordkeeper review in the next 12 months are considering a PEP as part of their review process.”
Seventy-one percent of recordkeepers list PEPs as a major or moderate strategic priority and 63% believe the growth of PEPs will have a positive effect on their recordkeeping business.
Emerging business with micro and small market segments have also pushed recordkeepers to prioritize PEPs and personalization, the research observes. According to Cerulli, over half of recordkeepers believe plan segments with $1 million to $5 million and $5 million to $25 million will be a major source of growth for PEPs within the next two years. As a result, recordkeepers say they are collaborating with retirement aggregators and retirement specialist practices that work with employers in these segments.
More recordkeepers are also allotting additional resources to participants as part of this renewed attention. The findings report that 88% of recordkeepers say participant personalization is a major or moderate strategic priority, with 82% of recordkeepers planning to increase allocations of resources to participant analytics. Cybersecurity, the implementation of artificial intelligence (AI), and participant technology are also expected to see growths (73%).
“In a competitive industry where fees continue to be under pressure, recordkeepers are focused on finding potential efficiencies, new revenue opportunities, and winning new business while meeting the needs of plan sponsors and participants,” Bailey concludes. “While the industry is making significant strides in providing participants with the help they need, recordkeepers should continue to remind plan sponsors and participants that these services are available to increase utilization and help improve outcomes.”