Employers are used to the challenge of balancing cost control, regulatory compliance and employee well-being when structuring benefit programs. Organizations rely on medical carriers, pharmacy benefit managers (PBMs), and third-party administrators (TPAs) to manage many of the complexities of their healthcare plans. This allows them to focus on their core business while ensuring employees receive high-quality coverage. This approach has provided a model for efficiently outsourcing administrative burdens, mitigating compliance risk and achieving economies of scale.
For years, a similar outsourced model was not broadly available for retirement plans. Employers spend significant time and resources to effectively manage every aspect of their own plans. They are also challenged to maintain the necessary specialized expertise needed to manage risks effectively. Now, legislation has expanded the opportunity to outsource in a holistic way in the retirement space. Pooled Employer Plans (PEPs) offer employers a way to streamline retirement plan management, much like how most employers manage their health plans. By outsourcing administrative tasks, fiduciary responsibilities and compliance requirements to a Pooled Plan Provider (PPP), employers can simplify plan management while continuing to provide employees with competitive retirement benefits.
This article explores how PEPs mirror the proven approach employers take with healthcare benefits and why we believe they represent a logical next step in benefits management.
How PEPs bring best practices from healthcare to retirement benefits
Much like the outsourcing of health plan management, PEPs provide an opportunity for employers to streamline retirement plan management while maintaining a market-leading experience for employees. Here are some key similarities:
Considering the role of PEPs in benefits strategy
Employers have long recognized that leveraging outside expertise in healthcare benefits can lead to greater efficiency, risk mitigation and improved employee outcomes. PEPs offer a way to apply those same principles to retirement benefits. As organizations evaluate how to structure their benefits in a way that best serves both their business and their employees, PEPs present an option worth considering alongside traditional retirement plan structures.
Source
- Source: WTW’s Rx Collaborative 2024 Annual Report to Employers. Return to article
Disclaimer
This document was prepared for general information purposes only and does not take into consideration individual circumstances. The information contained herein should not be considered a substitute for specific professional advice. In particular, its contents are not intended by Towers Watson Investment Services, Inc., and its parent, affiliates, and their respective directors, officers and employees (WTW) to be construed as the provision of investment, legal, accounting, tax or other professional advice or recommendations of any kind, or to form the basis of any decision to do or to refrain from doing anything. The information included in this presentation is not based on the particular investment situation or requirements of any specific trust, plan, fiduciary, plan participant or beneficiary, endowment, or any other fund; any examples or illustrations used in this presentation are hypothetical. As such, this document should not be relied upon for investment or other financial decisions and no such decisions should be taken on the basis of its contents without seeking specific advice. WTW does not intend for anything in this document to constitute “investment advice” within the meaning of 29 C.F.R.§ 2510.3-21 to any employee benefit plan subject to the Employee Retirement Income Security Act and/or section 4975 of the Internal Revenue Code.