Willis Towers Watson (WTW) is adding a new pooled employer plan (PEP) to the U.S. market, set to simplify 401(k) plan sponsorship for employers and improve outcomes for employees.
WTW announced its LifeSight PEP, established to target lower plan costs and improved employee outcomes while reducing the operational burden and fiduciary role employers currently face, according to a news release issued today. LifeSight already acts as WTW’s defined contribution (DC) multi-employer pension trust.
“We’re excited to announce WTW’s LifeSight PEP, which will help employers address the increasing complexities of sponsoring a defined contribution plan,” said Michele Brennan, LifeSight U.S. business leader at WTW, in a press statement. “Designed with a commitment to innovation for improved outcomes, the LifeSight PEP will allow employers to offer a market leading defined contribution plan and employee experience with limited demand on their internal resources, enabling greater focus on strategy and core business.”
Transamerica will work as recordkeeper of the LifeSight PEP, where it will oversee administration and recordkeeping for the PEP.
“WTW and Transamerica share the same goal of helping U.S. workers save for a secure retirement,” said Phil Eckman, president of Transamerica’s Workplace Solutions division, in a statement. “The LifeSight PEP allows employers to offer a valuable tax-advantaged benefit to their employees knowing that their retirement plan is being managed and administered by time-tested professionals. We look forward to helping more U.S. workers prepare to retire with confidence.”
While PEPs may be generally offered to small employers only, Willis Towers Watson notes LifeSight will be available to companies of all sizes and industries, but is designed for plans “from a few hundred employees to as many as 10,000 or more,” according to Brennan, in comments submitted to 401(k) Specialist.
The cost of the PEP will be based on the number of participants and the plan assets for each participating employer and could be up to 40% less than what employers pay today, added Brennan in her comments.
This is the third market that Willis Towers Watson has offered a PEP in, already having offered pooled employer plans in the U.K. and Europe. WTW now joins other recordkeepers and firms including Paychex, Aon, Principal Financial, and more, in offering pooled employer plans since the SECURE Act was passed in 2019.
PEPs were all the rage when the SECURE Act initially passed, created to provide cost-effective workplace retirement plans for smaller businesses who could not afford the benefits typically seen with larger employers.
Since its offering, PEP usage has grown exponentially, with Aon announcing last year that its PEP had reached “$1 billion in U.S. 401(k) assets and commitments since its inception on Jan. 1, 2021.”
The plans saw another push with SECURE 2.0, with the legislation now allowing 403(b) plans to participate in PEPs and eliminating the “one-bad-apple” rule.
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