Why PEPs Are Gaining Ground—and What That Means for the Future of MEPs
The retirement plan landscape is evolving rapidly. Since the SECURE Act introduced pooled employer plans (PEPs) in 2021, we’ve seen a wave of innovation and adoption that’s reshaping how small and mid-sized businesses approach retirement benefits.
While multiple employer plans (MEPs) have long served as a valuable solution—particularly for professional employer organizations (PEOs) and trade associations—PEPs are emerging as a compelling alternative that offers new levels of flexibility, scale, and fiduciary support.
At this early stage, it’s not about PEPs replacing MEPs outright. Rather, it’s about understanding where each structure fits best—and how advisors and plan sponsors can leverage the strengths of both to expand access to retirement plans and improve outcomes.
A Brief Look Back: How We Got Here
MEPs have been around since before the establishment of ERISA in 1974, evolving from defined benefit to defined contribution structures. Their growth accelerated in the late 1990s with the rise of professional employer organizations (PEOs) and gained further traction in 2012 when regulatory guidance clarified how unrelated employers could participate in pooled plans.
These innovations laid the groundwork for what we now know as PEPs. Introduced under the SECURE Act and expanded by SECURE 2.0, PEPs build on the MEP model by removing the “commonality” requirement and the “one bad apple” rule. They also introduce a new fiduciary framework centered around the pooled plan provider (PPP), who assumes key responsibilities as plan sponsor, 402(a) fiduciary, and 3(16) administrator. This structure offers employers a high degree of fiduciary outsourcing, pricing scale through aggregation of assets, and administrative simplicity—helping to overcome three of the biggest barriers to plan adoption in the small business market, which are fiduciary burden, cost and administrative complexity.
Why PEPs Are Gaining Momentum
While both MEPs and PEPs offer scale, PEPs are designed to streamline operations and reduce risk in a more standardized way. Additionally, I believe there is a solid rationale for restating MEPs to PEPs in certain verticals. For example, PEOs and trade associations that were early adopters of MEPs are now exploring how “PEPing” their plans—transitioning to a PEP structure—can further streamline plan administration and enhance service delivery.
The CEOs of PEOs that I have spoken with have responded well to the idea of 1) transitioning the fiduciary work to a registered PPP within a PEP, 2) gaining comfort and additional clarity when adding their payroll or administrative outsourcing (“ASO”) clients into the same pooled plan, and 3) enjoying the administrative scale that has come to the market with online payroll or HRIS integration with third parties.
Trade associations with MEPs often lack the “central nervous system” of common payroll remittance or integration, whereas PEOs naturally have this built into their ecosystem. Further, the boards of trade associations are rightfully focused on risk management with fiduciary duties and administrative burden that distract from the daily affairs of membership advocacy and development. A PEP, supported by a registered PPP and enabled by modern technology, can offer a more cohesive and less burdensome solution—allowing association leaders to focus on member advocacy rather than fiduciary oversight.
What Advisors Need to Know
PEPs allow advisors to standardize service agreements, leverage third-party fiduciaries, and scale efficiently—particularly in the underserved small business segment. For advisors, the rise of PEPs represents a strategic opportunity to expand their retirement plan business and deepen client relationships.
Here are four ways to get started:
1. Start the Conversation: Talk to business owners about the simplicity and benefits of PEPs, especially those without a current plan.
2. Engage Trade Groups: Ask clients if they belong to industry associations and explore opportunities to bring pooled solutions to their members.
3. Modernize Existing MEPs: Identify MEPs that could benefit from transitioning to a PEP structure to reduce complexity and risk.
4. Bridge Practices: Integrate retirement and wealth management services to fill the void in the small market and gain wallet share.
Looking Ahead: A Complementary Future
Will PEPs replace MEPs entirely? Not likely. But they will continue to gain ground—especially in markets where administrative simplicity, fiduciary outsourcing, and technology integration are top priorities. MEPs will remain relevant in certain verticals, particularly where existing structures and relationships are well-established. Ultimately, both models serve a common goal: expanding access to retirement plans and improving outcomes for American workers. As the industry continues to evolve, the most successful advisors and providers will be those who understand the strengths of each approach—and know when and how to deploy them.
Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company (Equitable Financial) (NY, NY), and Equitable Financial Life Insurance Company of America (Equitable America), an AZ stock company with an administrative office in Charlotte, NC, issuers of insurance and annuity products, and Equitable Distributors, LLC. The subsidiaries of Equitable Holdings, Inc. do not provide legal or tax advice or services. GE-8123107.1(07/25)(exp.07/29)
Jim Kais is Head of Group Retirement for Equitable and a member of the Operating Committee. He is responsible for the strategy, product portfolio, client experience and financial results for the company’s tax exempt 403(b), 457 and small business 401(k) markets.
